The US is the most litigious society in the world, the number of lawsuits continue to increase year after year. It is not only those who are in high-risk professions who are susceptible to liability claims and lawsuits, but anyone with assets that are exposed to possible threats. There are several ways that you can reduce your exposure, minimize your risk and protect your assets so that no matter what may have your future will be secure.
How to Protect Assets from Threats?
This is a simple initial step that is just to cover the basics. While insurance is a great way to provide basic asset protection, at the same time, it is also good to not “over-insure”. The cost of insurance policies does add up, and so it is better to not spend unnecessary capital on insurance you do not need. You might also find that another asset protection strategy in this list provides better protection and cover in a certain area than an additional insurance policy would.
If you are self-employed or run your own business, it is important to ensure that your business assets are legally separate from your personal assets. Limited Liability Companies (LLCs) as well as Corporations are two types of business entities which provide liability protection to the owners.
An LLC is a separate legal entity that creates separation between you and your business assets. This is an important distinction so that your liability is not tied to your business.
- Offshore Trust
One of the most powerful asset protection tools is that of an offshore trust. All trusts provide some level of asset protection, but offshore trusts are specially designed to provide the highest level of security to your wealth, as well as having other advantages such as privacy and tax efficiency.
Offshore APT’s although they provide the highest levels of privacy, protection, and tax efficiency, but they are more expensive, time-consuming and difficult to establish. Domestic trusts are more convenient and affordable to set up, but are less impervious to local court rulings and investigations.
- IRA Accounts
If you live in a state with relatively strong IRA protection, then an easy and effective way to protect your assets from civil lawsuits is to move some of them into your retirement account. A second option is to start a Self-Directed Offshore IRA which gives you more flexibility and control over your retirement account.
The way in which your property is titled can also have an impact on asset protection. Jointly owning your property with your spouse can actually lead to greater protection, as the law deems that you both have an equal and undivided interest in the property.
These strategies are most effective when used together as an integrated and holistic plan, not in isolation. For this reason, it is worthwhile to enlist the expert services of an asset protection attorney to help you formulate the ideal asset protection strategy for you.
It is important to remember that most of these strategies are only effective when established long before a lawsuit arises, otherwise the courts may deem your attempts to move your assets to safety as an instance of fraudulent conveyance. Don’t wait for things to go wrong before acting. Be proactive about protecting your hard-earned wealth and take the necessary steps today.