Acquiring assets, including property, is something that many people spend a lot of time and effort doing. However, not everyone understands the importance of putting asset protection plans in place to ensure the retention of these assets should they be threatened in the future.
Asset protection concerns keeping your property safe in the event of litigation claims against you. If someone wins a lawsuit against you – and this could be anything from causing a car accident to not paying debts – you could feasibly lose your property.
Protecting assets
Asset protection planning is the key to making sure your assets can’t be used as claims against you from creditors.
Planning entails taking non-exempt assets (those that could be subject to creditor claims) and making them exempt assets.
You can’t put in place asset protection planning when a judgement is heading your way or, indeed, if you are aware of one coming your way which hasn’t yet formally been started; instead it needs to be planned well in advance
Planning to protect your assets
This involves examining your financial goals, both short and long term and looking ahead to your estate planning ideals.
You need to know how much you will need for your retirement, and how you would like to split your estate to your heirs when you die. This involves making a detailed, long term financial plan.
When you have this information, you can find out which of your assets are exempt from creditors. If they’re not, this is the time to get legal advice on how you can reposition them to become exempt.
Estate planning and asset protection
Your detailed financial plan will show you your net worth and an accurate estimate of how much you can expect to acquire in the future.
From this information, you can create an estate plan, which will lay out who will look after your assets should you either become mentally incapacitated or if you die. The estate plan can include asset protection planning using certain financial planning techniques, including family limited liability companies and family trusts.
Integrating your estate planning with your financial goals will give you the information you need to reposition your assets and therefore keep them safe. However, it’s vital that the planning is far in advance of any likelihood of creditors claiming your assets.
It’s not possible to start asset planning after you know that either a lawsuit has been filed against you, or you haven’t made payments on a debt. If you attempt to reposition assets after you could feasibly have known the lawsuit was on the horizon then it’s likely to be reversed in court.
Therefore, it’s important to get advice and start planning for your asset protection sooner rather than later.
Turner Little can assist you with asset protection. More details on our Asset Protection services can be found here. Alternatively, please call 01904 783101 to speak to one of our advisers.
