Asset Protection: Are Your Assets Hanging in the Wind?
What asset protection is and why it’s important to you.
A few short years ago, asset protection was something that you probably wouldn’t even need to discuss, and if you did discuss it, it would be behind closed doors with your CPA. However, today the topic of asset protection is becoming increasingly common and it’s important to understand the basics of asset protection in order to keep your financial future safe and secure.
What Is Asset Protection Planning?
To begin asset protection, you must first understand what asset protection planning is. Asset protection planning involves figuring out where and what your assets are and setting up legal channels that will help you protect your assets from the claims of present and future creditors.
So what exactly does that mean? Let’s say party A were going to sue you because they slipped on your sidewalk. If you had your assets out there for everyone to see, they might be more inclined to try to take you for a ride.
However, if your assets were hidden and you practiced good asset protection, it might be impossible for them to grab a hold of those assets or collect against any potential judgment. This would significantly deter them from trying to get more from you than they deserved, or anything at all.
Some Common Asset Protection Techniques
If you have creditors going after your assets, there are some simple ways you can protect them. Vehicles, for instance, can have a lean put against them by a family member if you borrow money against the car. Your house can be sold to your son or daughter so it is not at risk to creditors. These are all asset protection techniques that are employed by people who are trying to protect their assets.
What About A Trust?
While a trust is a very good tool for probate, it is not necessarily a great tool for asset protection. Many people make the mistake of thinking that by putting their property in a revocable living trust, they are protecting their assets. However, a trust is not adequate asset protection. A creditor can petition the court to go after the property in your trust and may likely get that petition granted if they have good cause to do so.
Because everyone’s asset protection needs are so varied and the laws tend to become complicated, it is important to discuss asset protection with a CPA, attorney or another qualified professional. If you’re serious about asset protection, you’ll want to make sure you have all of your bases covered.