Authored By Kristin Gifford
Asset protection is crucial to keeping your assets protected against creditors who may be legally attempting to seize them. Through careful planning, your estate or business can efficiently manage its assets and prevent certain parties from getting hold of them. Creditors can take assets from families if they can produce any sort of claim to them. Fortunately, you have options to prevent that from happening. A qualified attorney can ensure your assets belong to your estate or business by using several different strategies.
Asset protection comes in many forms, and each comes with its own benefits.
Limited Liability Companies
By creating a limited liability company (LLC), you can ensure your personal assets are protected against legal action. Creditors have the right to distributions paid out via the LLC, but you are not required to make these payments. According to LLC law, you do not have to pay out any assets to a creditor, as they will instead receive a tax bill. You are not responsible for any debts or legal liabilities that the LLC accumulates, as an LLC is considered its own entity. While there are a few exceptions to this rule, an LLC is still a strong option to consider for protecting your assets.
Creating Trusts
Trusts are one of the strongest asset protection tools you can use. They can protect your assets from creditors, legal claims, and anything else threatening your estate or business. A trust is defined as an agreement that allows a third party to withhold assets on behalf of the beneficiary. Through a properly structured trust, creditors will not be able to obtain any assets under the trust. This allows you to maintain and manage your wealth.
Trusts come in two types: revocable and irrevocable. Irrevocable trusts are stronger than others, but they come with one drawback. It is important to know this before creating this type of trust. You cannot overturn or revoke this trust after it has been put in place. When you create this trust, you give up your ownership of the assets and hand them over to the trustee. You will be unable to change any terms that have been previously established in the agreement.
A revocable trust allows you to change the terms that were previously agreed on, but you will still be considered the owner of these assets. This offers less protection against creditors and legal claims, which increases the risk of losing said assets. Should you have any questions or concerns regarding a trust, speak with an attorney immediately.
The Powers of Attorney
If you are unsure of how to handle your assets, or if you become incapacitated and cannot make any decisions, hiring an attorney may be your best option. An experienced and knowledgeable attorney can make these complex decisions on your behalf to protect your assets. Even if you decide not to have an attorney make these decisions for you, it is beneficial to have an attorney you can contact. They can clear up any confusion you may have about anything related to asset protection.
Regarding Insurance Policies
It is common for clients to believe that their insurance plan covers their assets from legal claims and creditors, but this is not the case. While insurance can minimize the risk of you losing certain assets, it cannot fully protect you. You must take the necessary action and put proper asset protection into place. Otherwise, you could lose your business or property, even while insured.
FAQs
Q: How Do the Wealthy Protect Their Assets?
A: The wealthy typically protect their assets by creating trusts and LLCs. Trusts are agreements that allow a third party to access a beneficiary’s assets and keep them protected from other parties. LLCs are used to prevent creditors from taking assets from a business should it be charged with legal action. This allows the wealthy to maintain their assets and prevents them from being lost due to a lawsuit or other legal action.
Q: What Is the Best Trust Structure for Asset Protection?
A: For the most protection against creditors and legal claims, you will want to establish an irrevocable trust. There is one disadvantage, which is the fact that you cannot alter the agreement after it takes effect. However, it offers the most protection for your assets. Through an irrevocable trust, your assets are not considered personal property. This means that creditors cannot access them for any reason.
Q: Does an LLC Protect Your Personal Assets?
A: Yes, an LLC will protect your personal assets, including your cars, home, bank accounts, and more. Should legal action be taken against your estate or business, an LLC will keep your assets protected. This prevents creditors and legal claims from seizing them. There are specific laws that LLCs must follow to be considered legal. Be sure to speak with a legal professional regarding LLCs.
Q: What Are Examples of Asset Protection?
A: There are several examples of asset protection you can use to prevent creditors and legal claims from accessing your assets. You can establish an LLC to protect your personal assets from legal action against your estate or business. You can also create a trust, allowing a third party to manage your assets if you are unable to. Finally, an experienced attorney can make decisions on your behalf if you are unsure how to manage your assets.
Lobb & Plewe Can Help
Asset protection can be instrumental in preventing creditors from accessing your hard-earned assets. However, asset protection strategies must be utilized legally and efficiently to get the most out of these protection methods. This can be a complicated task to manage, but our team is willing to help.
At Lobb & Plewe, we work diligently with clients who are at risk of losing their assets. We want to keep your assets secured in the best manner possible, regardless of who you are. The legal system can be complex, especially when assets are involved, but this is our specialty. By getting in touch with us, we can be prepared to protect not only your assets but you, your family, and your future.
For more information about asset protection, contact us today.
