Jul 10, 2020
Typically, leaving your wealth to your family can be the best legacy you can ever give upon your death. You can have peace of mind, knowing that all your loved ones won't need to worry about their financial future going forward. However, there are instances wherein bad things can still happen to people like you.
For instance, facing a single lawsuit can destroy everything you've worked hard for as far as your family is concerned. Luckily, you don't need to lose everything you have. Having an asset and property protection plan in place can go a long way in protecting your assets and preventing yourself from getting sued by creditors and other people.
If you're not yet familiar with how asset and property protection works, keep reading this article to learn more about this subject matter.
What Is Asset And Property Protection?
In simple terms, asset and property protection refer to a set of strategies meant and designed to guard one's wealth against creditor claims and other lawsuits. It can help shield assets and properties without engaging in illegal and fraudulent ways of concealment.
Moreover, when people safeguard their wealth by using some of the asset protection strategies, the assets will be out of your name. When this happens, any judgment will not automatically be attached to their assets and properties. In other words, the creditors and judgment holders can't easily seize all the assets that are placed under an asset and property protection plan.
What Are The Different Asset And Property Protection Strategies?
Now that you know what asset and property protection is, it's about time to tackle how this concept works for you and your family's financial future. As mentioned, setting an asset and property protection plan can save you from the financial stress you might deal with later, thanks to the different strategies used in protecting your assets from any potential losses. By getting to know these methods, you'll get a better idea of how asset protection can work best for you.
Below are the common asset protection strategies you can use for your unique situation:
- Asset Protection Trust
If you have a large amount of money in several bank accounts, setting up an asset protection trust can be a perfect idea, an offshore trust being the most powerful of all. Primarily, this type of trust makes use of reputable trustees who are residing outside of your local court's jurisdiction.
For instance, an offshore trust in the Cook Islands can be a perfect example. The judge who is handling a lawsuit against you doesn't have jurisdiction over your trustees in the Cook Islands. This means that any creditors or judgment holders in your state will have a difficult time taking away the assets and properties covered by your offshore trusts in the Cook Islands.
Moreover, when it comes to asset protection planning in the Cook Islands, you don't need to transfer your assets to the area. Even if your money is deposited in a big bank in Switzerland, your offshore trust can still cover it.
- Limited Liability Company
If you're an entrepreneur, one of the best ways to protect your assets and properties is to use a limited liability company (LLC). When you set up an LLC, you can take advantage of a provision stating that creditors are prohibited from taking the company or the assets inside.
Moreover, using an LLC also gives your personal assets a shield from those people who want to take them away from you. For instance, if your business is being sued, and a monetary judgment is issued against you, the LLC can serve as your fortress to prevent judgment holders from seizing everything you've built for years.
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- Umbrella Insurance Coverage
Another asset and property protection strategy to try is to secure umbrella insurance coverage. It refers to backup insurance that you can use to cover the inadequacy of your other insurance policies.
For example, if your house insurance, auto, and other liability coverages are inadequate or already exhausted, you can make use of your umbrella coverage to shoulder the excess. In doing so, you can protect your properties from getting seized for monetary damages.
- Putting Your Assets And Properties Under Your Spouse's Name
If you're looking for the easiest method to safeguard your wealth against threats and other losses, you should consider putting your assets and properties under your spouse's name. As a result,, the creditors can no longer run after these assets for monetary damages. That's because they'll eventually form part of your marital properties, which means that the administration or disposition of the same will need consent from your spouse.
As you can see, there are many ways to secure your wealth for your family's future. These tools, for instance, serve as your financial security for the predators out there. Hence, it's best to educate yourself and determine the strategy that's right for you. You must also consult an asset protection lawyer to get these things done right.
Hopefully, this article has helped you in understanding how asset and property protection planning can work for you when the worst happens.