6 Asset Protection Strategies To Shield Your Wealth

There are many times where we fail to clearly comprehend the law and what it entails regarding various aspects of life. One of these aspects includes wealth protection. Some laws and regulations can be broad and seem vague the very first time that you read about them. This requires you to conduct deep research so as to find out the actual meaning behind the law.

Your wealth is very important to you because you worked so hard to get it. You need to know what laws are to protect you and your assets. The following are some asset protection strategies that you can use to safeguard your wealth:

1. Purchase Insurance

Accidents can happen at any time. This is why you need to get insurance in case you get into an accident and can no longer manage your estate. The insurance acts as the first line of defense in case someone attempts to sue you. Additionally, you should get an umbrella liability policy. Your insurance broker can help you with both of these.

2. Beware of renters

Renting requires you to sign a lease agreement that temporarily gives you ownership of property. Even so, renting means that you need to create a business entity such as a corporation or LLC to protect your assets from a tenant. This protects your personal assets and only leaves the ones that hold the real estate liable.

3. Make use of retirement accounts

In the event of bankruptcy, the federal law is supposed to grant you unlimited asset protection by owning an ERISA-qualified retirement plan. There are those with an IRA protection of up to $1 million in assets.

4. Exemptions on homesteads

In some states, home equity is protected such that courts are prohibited by law from giving creditors home equity when you claim bankruptcy. According to current laws, Florida and Texas are the only two states where you get full rights to unlimited home equity protection.

5. Informal partnerships must be kept formal

Most of these asset protection strategies emphasize the importance of not trusting people too much – even your relatives. Partnerships are good since they allow you to share losses and profits. Informal partnerships can be dangerous because they expose your personal assets to a potential lawsuit. A good example is if your partner gets involved in an accident. This will automatically put your property at the risk of being exploited. Make sure that you have a written agreement on how you are going to use and split finances.

6. Create an Asset Protection Trust

An asset Protection Trust allows you to control your assets and still enjoy beneficial use of them while keeping them out of reach of creditors. Consult an Asset Protection Attorney for how to set up an Asset Protection Trust.

Conclusion

You have to make sure that you watch how you acquire assets and other factors surrounding their ownership status and rights. This will help you to keep your assets safe from litigation issues.