Asset protection planning is the proactive process of legally safeguarding assets from potential risks, liabilities, lawsuits, soon to be ex-spouses, and creditor claims.
Asset protection planning can be used to safeguard your wealth from:
- Professional malpractice liability
- Personal liability of corporate officers and directors
- Lawsuits by former business partners
- Liability for Breach of Contract
- Employment law Liability
- Personal injury suffered on your premises
- Personal injury resulting from a motor vehicle accident
- Liability as guarantor for the debts of another
- Liability arising from misconduct
- Losing assets in a divorce
- Losing assets to a Medicaid spenddown
The goal of asset protection planning is to minimize the exposure of an individual's wealth and assets to potential threats while preserving and protecting those assets for the individual and their beneficiaries.
Here are some key aspects of asset protection planning:
- Identifying Risks: Asset protection planning begins with identifying potential risks and threats to an individual's assets. These risks may include lawsuits, creditor claims, divorce, business failures, professional liabilities, or other unforeseen events that could jeopardize the individual's financial security.
- Assessing Asset Ownership: Asset protection planning involves evaluating the ownership structure of assets to determine how vulnerable they are to potential risks. This includes identifying assets held in the individual's name, jointly with others, or through various legal entities such as corporations, trusts, or LLCs.
- Implementing Legal Strategies: Asset protection planning utilizes a variety of legal strategies and tools to shield assets from potential threats. These may include establishing trusts, creating LLCs or corporations, re-titling assets, utilizing exemptions and protections available under state and federal law, and implementing contractual agreements such as prenuptial agreements, spendthrift trusts, Medicaid protection trusts or domestic asset protection trusts (DAPTs).
- Maintaining Compliance: Asset protection planning must be conducted in compliance with applicable laws and regulations. It's essential to ensure that asset protection strategies are legally sound and do not involve fraudulent transfers, illegal activities, or violations of creditors' rights. Working with experienced legal and financial professionals is critical to developing and implementing asset protection plans that are both effective and legally compliant.
- Balancing Risks and Benefits: Asset protection planning involves weighing the risks and benefits of various strategies and determining the most appropriate approach based on the individual's specific circumstances, objectives, and risk tolerance. It's important to strike a balance between asset protection goals and other considerations such as tax implications, estate planning objectives, and personal preferences.
- Continual Monitoring and Review: Asset protection planning is an ongoing process that requires regular monitoring and review to adapt to changes in the individual's financial situation, legal landscape, or personal circumstances.
Contact Will and Trust Planning Today
For personalized advice on estate planning, including strategies to minimize or avoid probate, contact Will and Trust Planning today. Our experienced estate planning attorneys can help you understand your options, draft essential documents, and create a plan that protects your assets and achieves your goals.