You may have heard about asset protection planning and assume it only applies to very wealthy individuals or people in high-risk professions. In reality, asset protection is not only about protecting your assets from creditors. It can also protect you and your loved ones from unforeseen events. Our experienced California estate planning attorney can evaluate if you may benefit from asset protection planning.
Tip 1- Make Sure You Have Good Liability Insurance
One of the simplest things you can do to protect your assets is to get an umbrella insurance policy. Umbrella insurance can help protect you from claims that can happen to anyone, such as a car accident, an injury on your property, and much more. It can help cover any monetary damages you may be responsible for, plus some of your legal costs. Umbrella policies are often inexpensive and straightforward to obtain and can be bundled with existing insurances you already have.
Tip 2- Contribute as Much as You Can to Your Retirement
Qualified retirement accounts such as 401(k)s and IRAs are often exempt from the reach of creditors, even in bankruptcy. If you can save more money in a retirement account as opposed to a brokerage account or regular savings, you are not only planning for your golden years but also keeping these funds out of the hands of creditors or people looking to take advantage of you. Anyone with a qualified retirement account can employ this strategy regardless of whether they work for themselves or are a company employee.
Tip 3- Hold Investment Property in an Appropriate Business Structure
Unexpected accidents or injuries can occur on a property. The law will hold the owner liable for events on a property, sometimes regardless of fault. This state of affairs can encourage frivolous lawsuits, which can put property owners, and their assets, at risk. If you are liable for an injury or accident on your investment property, the plaintiff can enforce their claim against any other property you own, your bank accounts and more.
A simple way to shield your assets is to hold the property in a business entity. Many options, such as an LLC, Corporation, General Partnership, Limited Partnership, and more, may be available. Each entity may have different pros and cons, such as asset protection, tax benefits, and differing levels of liability for members, partners, or shareholders. The advantage of using one of these structures to hold your investment is that an individual owner’s assets may have a degree of separation, and the risk of their attachment may be significantly diminished.
Speak With an Attorney
The worst thing you can do is do nothing at all. If you have any assets, you should take steps to protect yourself and everything you have worked so hard for. Although thinking about asset protection may feel overwhelming, doing nothing can financially ruin you. A qualified attorney can help you navigate this process. Not every situation warrants the same asset protection solution. If you need assistance with asset protection in California, please get in touch with our office today for a free consultation.