Asset Protection

Asset Protection

Various forms of Asset Protection laws deal with the protection of your assets against potential future liabilities (creditors, judgments, etc.). Asset Protection planning cannot be done to avoid paying existing creditors or existing obligations. One of the most common protections sought is protection from a “nursing home” or other long term care costs. 

Asset Protection also includes the protection of assets from lawsuits, one’s own poor decision making, or fear of not having the mental capacity to manage the assets you have accumulated.  All of these are forms of Asset Protection planning.

The fundamental distinction of Asset Protection laws is that they require you to give up some portion of your right to control the assets you want to protect.  To restate that, if you want to protect your bank account, you must limit your right to unilaterally control it.

The law is straightforward : whatever you can get to, your creditors and predators can get to.  Most people confuse Asset Protection planning with Estate Planning.  They share crossover elements, but they are distinct.

The Asset Protection rules, for example, are much less restrictive. You can control your assets, manage them, change who you want to receive them and even benefit from your assets (i.e., live in your home even if it is owned in the name of a Trust, maintain the income from your assets, etc.). Even with these retained rights, benefits, and powers, your assets remain protected from your future predators, creditors, and  long-time care costs.

Contact us with further questions, or to schedule a consultation.

Top Questions For Asset Protection:

“We help great people achieve the American Dream.”

Top 10 Questions For Asset Protection:

Good Estate Planning involves or goes hand in hand with an Asset Protection strategy. Asset Protection by way of Estate Planning will leave your heirs free of inheritance issues.  On the other hand, good Estate Planning provides a good Asset Protection strategy.  You can eliminate the risk of losing everything, whether due to an accident, illness, a failed business, divorce, breach of contract, political changes, among others.

Also, good Estate Planning implies that you have control over how your assets will be divided. It also involves  reviewing your plan from time to time to keep it up to date, especially if you are accumulating assets and the people you want to include in your planning changes from time to time.

There are multiple ways in which Asset Protection planning would help in Estate Planning.  Here are several:

  • Provide for your loved ones.
  • Protect your business if you have one.
  • Maintain privacy on their affairs and avoid litigation.
  • Minimize the tax burden in matters of inheritance. 
  • Avoid the application of rules of forced inheritance. 

Asset Protection means finding ways to protect assets proactively. Financial planning and Estate Planning result in Asset Protection. Once you have integrated your financial goals with your Estate Planning goals and positioned or repositioned your assets to be protected from creditors and predators, you will have a comprehensive Asset Protection plan in place.
Estate Planning determines how assets are cared for and protected when individuals can no longer manage them or pass away.

Asset Protection is not just for the wealthy, or simply about protecting your assets from creditors and predators. Asset Protection, in its simplest form, is any method used to protect your hard-earned wealth from loss and dissipation due to life’s many uncertainties and vagaries.

Asset Protection plans can help protect homes, business interests, funds, and more. It’s a way to provide stability in an often unstable world. With a solid Estate {lan in place, you and your family will be able to handle the unexpected with ease, decorum, in a timely manner, and according to your wishes.

For example, let’s take the unfortunate case of a divorce happening to one of your children down the road. A well-drafted Trust can prevent your child’s inheritance from being given to an unfaithful former spouse. Or, if you own your business and suddenly fall ill, with the right documents, your business can be adequately managed and protected in your absence while you recover.

Liability insurance is at the top of any plan for Asset Protection. You should consider purchasing or increasing the umbrella coverage on your homeowner’s policy. 

For business-related liability, you need to purchase or increase your liability coverage under your business insurance policy. Generally,  the premiums cost for this type of coverage is minimal compared to what you might be required to pay under a court judgment should you ever be sued.

In addition to a working knowledge of taxation and business entities, an Estate Planning attorney at The Victoria Law Group wishing to engage as an Asset Protection planning is already familiar with general concepts of bankruptcy law and creditor/debtor law. 

Specifically, knowledge of how applicable fraudulent transfer/conveyance laws apply to proposed planning (either under the UFTA or UFCA) is  essential, and we are adept at it.

Asset Protection trusts are typically established by individuals in high-risk occupations (i.e., doctors and real estate developers), people with high net worth, business owners, professionals, and very wealthy individuals that realize they are targets for creditors due to their net worth. 

Asset Protection trusts can also be used instead of a prenuptial agreement.

In certain situations, an Asset Protection trust can be used to eliminate or reduce state income taxes. An Asset Protection trust may also be used to remove assets from a grantor’s estate while still allowing the grantor to benefit from the trust assets potentially.

Asset Protection plans are designed to shield your property from creditors.
A strong Asset Protection plan may have the ability to shield your assets and business from lawsuits. In the context of Estate Planning, this ensures that your assets pass safely to your heirs and beneficiaries under the terms you laid out in your Estate Plan.

A Limited Liability Company (LLC) is another tool that can be used in Estate Planning to protect assets.  An LLC is a corporate entity that is legally separate from the owners who are referred to as “Members.”

An LLC is primarily set up for a business purpose, but it can also be used to shield your assets from creditors. LLCs can hold property as well as buy and sell it.  The members control and benefit from the LLC, but the titles to their assets  remain in the company.