Many people who do not consider themselves to be wealthy may not worry about protecting their assets. This could be a mistake. Individuals at any income level should consider what they can do to protect their assets against creditors and lawsuits.
Anyone can be the target of a lawsuit. This can happen because of a car accident, unhappy neighbor, and for many other reasons. Without the proper asset protections in place, a person who loses a lawsuit could be financially wiped out. With the proper asset protections in place, it is possible to legally keep most, if not all, of your assets. Doing what is necessary to protect against unfortunate circumstances does not have to be difficult. It is something that should be discussed with an experienced asset protection attorney.
It is important for a person to put together a plan designed to protect their assets as soon as possible. This must be done prior to being involved with a lawsuit. In the middle of a legal action, it could be difficult to keep creditors from obtaining a person’s assets. Protective measures may not be able to be implemented during a lawsuit.
When a person decides to create a plan to protect their assets, it is important they have a goal. An individual should analyze their financial status, as well as identify which assets need protection or transferred. An experienced attorney can help with this part of preparation. They can also tell a person how to change their financial situation for their own benefit. An individual should be willing to commit the necessary time and effort to create the best possible plan.
There are many different elements associated with an effective asset protection plan. It could involve different financial and legal vehicles. This type of planning often involves utilizing state homestead protection laws, insurance policies, estate planning as well as other business vehicles and asset protection trusts.
It is possible to protect the equity in a home. Should a person lose a lawsuit and be forced to declare bankruptcy, a homestead exemption law prohibits a court from giving some of the equity of a homeowners house to creditors. Some states have no limits when it comes to the amount of equity that can be protected. Colorado only protects approximately $75,000 of equity in your home.
It is impossible for a creditor to take an asset a person does not own. It may benefit a person to consider transferring certain assets into an asset protection trust. This financial vehicle makes it possible to have family members receive income or give certain assets outright to specified family members.
Life Insurance And Annuities
In many cases, a person could have significant asset protection with cash value life insurance policies as well as annuity balances. It is important to check with an attorney to learn a state’s specific exemptions.
Unlimited asset protection is provided by ERISA-qualified retirement plans according to federal law. It is possible to protect up to a million dollars in assets with a retirement account. Some states provide protection for even higher amount of assets.
Proper planning for asset protection should involve working with an experienced attorney. Doing this will provide protection for investments, wealth, real property, savings and more accumulated over a lifetime. A plan will also include protecting future assets. An Asset Protection Attorney can create a plan that can make it difficult, if not impossible, for a creditor to take your assets.
S. Blake Harris is the Managing Attorney at Mile High Estate Planning where he assists clients with Wills and Trusts, Asset Protection, and Probate. Blake has extensive knowledge and experience helping families plan for and manage the transfer of their assets.
Blake has a degree in Finance from the University of Florida and a Juris Doctorate from the University of Florida College of Law, a top tier law school. While in law school, he worked in the investment banking industry in New York City.