Asset Protection Planning Steps

There are many forms of asset protection. Estate planning is typically a first step towards organizing your property utilizing gifts of property that isn't intended to defraud creditors. In this case the secondary concern is whether or not the recipient of your gift, or spouse, jeopardizes the property.

Retirement plans have built in asset protection through state and federal laws. Life insurance and some trusts can prevent creditors while the property is not in the hands of the beneficiary.

Asset Protection Planning and Liability

Incorporating a business using corporations and limited liability companies, limited partnerships and other business structures extend a great deal of personal liability protection and many tax advantages. The legal formation of your business is critical, by creating a separate legal person that conducts business, you alleviate the risk of exposing assets personally to any liability brought on from your business affairs. The business structure must be established and operated properly in order maximize the asset protection benefits.

By forming a domestic trust or revocable living trust, you avoid probate and you can transfer assets and property into your trust, however those assets are still available to a creditor. It makes is more difficult and the creditor must seek a charging order by petitioning the court before the creditor can access the assets in your trust. A revocable living trust is not a preferred asset protection tool.

Chapter 7, liquidation bankruptcy, any non-exempt assets can be taken to benefit your creditors. In some cases you can convert non-exempt assets into exempt assets before filing. These cases you need to advise from a local legal counsel due to the rules between states and even courts will vary.

When designing an asset protection strategy, traditional methods should be considered immediately, however they might not always be enough alone.