Asset protection is an integral part of estate planning. It keeps your property out of the reach of a would-be lawsuit. Potential lawsuits can range from a case of negligence in an automobile accident to a foreclosure lawsuit filed after you stop making the mortgage payments.
You can keep the above-referenced assets out of the reach of any future financial claims against you by engaging in asset protection planning. This process must happen well before anyone lodges a judgment or lawsuit against you. Anyone who transfers assets to avoid paying potential creditors may face fraud accusations. A judge may also reverse such transfers.
What does asset protection planning entail?
Short and long-term financial goals require proper planning.
Two effective ways that you can protect your family are by establishing a limited liability company (LLC) or an irrevocable trust. Both of these shield from potential creditors (which can also encompass plaintiffs in a civil case). An LLC is a corporate structure that has built-in liability protection. Irrevocable trusts generally cannot be modified by the trustor once funded. The beneficiaries must instead initiate such actions.
Is asset protection planning right for you?
One of the more common mistakes people make is trying to protect their assets once someone files a lawsuit against them. By then, it is already too late. Effective asset protection planning should start as early as possible, and change according to your life goals and needs.
An experienced asset protection attorney may be able to help you avoid the pitfalls that many people face due to not properly planning for unforeseen circumstances. Don’t let it happen to you.