When it comes to plans to protect your assets, there’s no one-size-fits-all option, and choosing the wrong tools can leave your assets unprotected. To ensure that doesn’t happen to you, we’ll explain how to choose the right asset protection plan for your needs:
- What Is Asset Protection?
- Who Needs an Asset Protection Plan?
- 3 Questions to Help You Choose an Asset Protection Plan
- Elements of a Good Asset Protection Plan
What Is Asset Protection?
Asset protection is the practice of safeguarding property from creditor claims. Individuals and businesses use it to protect their valuables from seizure by the court. Asset protection is accomplished through the use of tools like LLCs, offshore asset protection trusts, and land trusts.
Who Needs an Asset Protection Plan?
Many people operate under the false assumption that only extremely wealthy individuals or companies need asset protection. While it is true that the more wealth someone has, the greater risk a lawsuit presents, asset protection benefits everyone. Here are a few examples of people who should consider an asset protection plan:
- Entrepreneurs who want to mitigate the financial risk of starting a new business
- Retirees aiming to create an inheritance for their family
- Terminally ill people who want to avoid having medical bills drain their accounts
- Anyone who feels they have a high risk of being sued, especially doctors.
- People with several real estate investment properties
Put simply, if you want to keep your assets safe from creditors and other threats, then an asset protection plan is right for you.
3 Questions to Help You Choose the Right Asset Protection Plan
As you can see, just about anyone can benefit from some kind of asset protection plan. But not everyone needs the exact same plan. To ensure that you pick the right plan, ask yourself these questions:
1. What Kinds of Assets Do I Need to Protect?
Asset protection starts with knowing exactly what you need to safeguard, because the type of assets you own determines the tools you’ll use. For high net worth individuals, an offshore asset protection trust will adequately defend most liquid assets. However, let’s say much of your net worth is tied up in real estate holdings. In that case, you may use equity stripping, LLCs and land trusts to gain protection. It’s best to speak with a professional, like those at Asset Protection Planners, to determine exactly what tools will effectively protect your wealth.
2. Do I Have Any Enhanced Risks?
Certain people, like doctors and entrepreneurs, have a much higher risk of getting sued. People working in these professions often use tools like offshore asset protection trusts, which provide the highest level of protection available. Choosing a less robust strategy, like a domestic asset protection trust or even a limited liability company (LLC), can leave assets vulnerable to crafty lawyers.
3. What Measures Am I Willing to Take?
Your asset protection plan should include tools that you’re comfortable using. If a particular strategy seems too risky for you, talk to your asset protection planner to determine if the perceived risk is worth the outcome. However, don’t pass over a tool just because you’re unfamiliar with it. Often, the perceived risk of tools like offshore trusts is far greater than the actual risk of using one.
Elements of a Good Asset Protection Plan
After asking yourself the above questions, it’s time to speak to an asset protection specialist. Provide them with the answers to each of the questions from the previous section, and tell them your asset protection goals. Once you’ve provided that information, they’ll start developing a plan. Ideally the plan that they create will:
- Balance asset control and protection – This is probably the most important aspect of a well-managed asset protection plan. You want to have a balance of control and ownership of your assets so that they don’t vanish in a lawsuit but remain within your reach. If there isn’t enough separation between you and your property, lawyers and creditors will be able to make a case that your assets are not satisfactorily secured, allowing these predators to come after your wealth. The key is to maintain enough control so that you can decide what to do with your property, but not so much that a judge could decide for you.
- Contain more than insurance – Insurance is not a replacement for a sound asset protection plan and the proper legal tools. Insurance is just one part of a wealth defense strategy. It should be used to supplement the legal tools, such as LLCs and trusts, and to help ward off small claims. Insurance rarely protects against major lawsuits, and it won’t pay your legal fees. There are far too many clauses written in today’s policies that allow the insurance companies to squirm out of paying claims. This is why a protection plan is needed to supplement normal insurance.
- Set up before legal threats emerge – There is an old saying that goes, “An ounce of prevention is worth a pound of cure.” Creating an asset protection plan after you have been sued, or while you are in danger of being sued, is less effective than doing so beforehand. Most forms of protection work best when implemented before a claim.
Hire Asset Protection Planners to Always Choose the Right Plan
Keep in mind that the above is just an overview designed to guide you toward the right asset protection plan. To ensure that you choose one that works, you need to hire an expert, like those at Asset Protection Planners. With our help, you’ll have a strategy that can effectively defend your holdings from the threats that are most pressing.
Don’t leave your assets unprotected. Fill out the form below to schedule a free consultation with one of our team members.
