Asset protection planning is a proactive strategy to safeguard your personal, real estate, and business property from attack.
With effective planning, you can protect your assets from creditor claims, lawsuits, divorce, and the like.
Often, clients mistakenly assume that asset protection is only for business owners or the very wealthy. The reality is that everyone who has something to lose needs some form of asset protection. This includes:
The gainfully employed. You will need a strong asset protection plan in place if you are employed and want to be prepared for an unexpected job loss, business loss, or lawsuit.
Entrepreneurs. Entrepreneurs should seek asset protection in order to safeguard assets from common business risks.
Retirees. If you want to safeguard your assets for the benefit of your children and grandchildren, it’s important to have a solid asset protection plan in place.
Professionals. Asset protection is especially important for professionals who have a high degree of liability, such as medical professionals, financial planners, landlords, lawyers, and real estate professionals.
Individuals who have accumulated assets. Anyone who has accumulated, inherited, or may inherit wealth, investments, or a business needs an asset protection plan. A strong plan can protect your assets during times of financial hardship.
Individuals with debts. It’s critical for people with significant debts to have a powerful asset protection plan in place. This includes individuals with credit card debt, business debts, loan payments, or mortgage payments.
Individuals with tax liabilities. Similarly, you should consider some form of asset protection if you face or think you may face a tax or other government liability.
Virtually everyone needs a good asset protection plan, from hard-working professionals to recent graduates. With an expertly crafted asset protection plan, you can build a wall around your estate and protect your nest egg for you and your family. On the other hand, without a solid plan in place, your hard-earned assets will be susceptible to creditor claims, legal judgements, and divorce settlements.
Essential Asset Protection Tips
A good asset protection plan incorporates a variety of thoughtful techniques and actions aimed at preventing lawsuits, strengthening settlement negotiation abilities, and shielding your assets from seizure. While every asset protection plan should be unique to your personal, family, and financial circumstances, there are certain tips that everyone should keep in mind while creating an asset protection plan.
Start now. The time to begin asset protection planning is before a creditor claim or lawsuit arises—not after. Many of the actions you attempt to take after a claim could be unwound due to fraudulent transfer laws. In this situation, you and anyone who helped you in the transfer could be held responsible for paying the attorney fees of the creditor. You could also be barred from getting a bankruptcy discharge.
Keep personal and business assets separate. You can protect your commercial assets using business entities, including corporations, LLCs, and partnerships. However, it’s important to keep your personal assets away from your business entities, setting them instead within properly created trusts. Otherwise, you can end up making your business entities more vulnerable to creditor attacks, thus endangering both your personal and business assets.
Keep it simple. The most effective asset protection plans are simple and based on common sense. If your asset protection plan is so complex that you cannot fully explain how your assets are held, structured, and transferred, this could result in a court becoming suspicious and even deciding to discount entities or set aside transfers.
Consult with a lawyer. The best asset protection plans may be simple, but Florida asset protection law is quite complex. Asset protection law involves components of many legal disciplines, including estate planning, litigation, and tax laws. Crafting an effective asset protection plan requires a thorough understanding of state, federal, and international laws, as well as extensive knowledge of economic and financial dealings.
If you are interested in creating an asset protection plan to safeguard your property for the benefit of you, your family, and future generations, consult with an experienced estate planning lawyer. Your attorney can work with you to develop an estate plan that accommodates your unique needs, financial situation, and family circumstances. He or she will do this by helping you determine what types of strategies will work best for you, and understand your different options and the pros and cons of each one. Additionally, a lawyer can help you properly draft legal documents to minimize the opportunity for error and ensure your asset protection plan works smoothly and as you intended. With the guidance and counsel of a skilled and resourceful attorney, you can protect your hard-earned assets from creditors, lawsuits, and financial challenges.
About the Author:
Christopher Q. Wintter is the founder of Wintter & Associates, P.A. and a board-certified expert in Trust and Estate matters by the Florida Bar. With more than 24 years’ experience as a practicing attorney, he also serves as an instructor and faculty member for the National Institute of Trial Advocacy (NITA)—the nation’s leading provider of legal advocacy skills training to practicing attorneys—and has earned the AV® Preeminent™ rating with LexisNexis Martindale Hubbell. He was also selected for inclusion in Florida Super Lawyers for 2011 and 2012 in Estate and Trust Litigation.