While most people assume only the uber wealthy need to worry about asset protection, those with less wealth and fewer assets may be at even greater risk. For example, if you’re a multi-millionaire, a $50,000 judgment against you might not be that big of a burden. But for a family with a modest income, home, and savings, it could be catastrophic.
Asset protection planning isn’t something you can put off until something happens. Like all planning, to be effective, you must have asset protection strategies in place well before you actually need them. Plus, your asset protection plan isn’t a one-and-done deal: It must be regularly updated to accommodate changes to your family structure and asset profile.
There are numerous planning strategies available for asset protection, but three of the most common include the following:
1. Insurance
Purchasing different forms of insurance—health, auto, watercraft, and homeowner’s—should always be the first line of defense to protect your assets. Whether you’re ultimately found at fault or not, if you’re ever sued, defending yourself in court can be extremely costly.
Insurance is designed not only to help you pay damages if a lawsuit against you is successful, but the insurance company is also responsible for hiring you a lawyer and paying his or her attorney’s fees to defend you in court, whether you lose or win. However, insurance policies come with various amounts of coverage, which can be exceeded by large judgments, so you should also seriously consider buying umbrella insurance.
Should your underlying insurance policy max out, an “umbrella” policy will help cover any remaining damages and legal expenses. We can help evaluate your current policies and ensure you have the right types and amounts of insurance for maximum asset protection.
2.
Business entities
Owning a business can be
an incredible wealth-generating asset for your family, but it can also be a
serious liability. Indeed, without the proper protection, your personal assets
are extremely vulnerable if your company ever runs into trouble. For example,
if your business is currently a sole proprietorship or general partnership, you
are personally liable for any debts or lawsuits incurred by your business.
Structuring your business as a limited liability company (LLC) or S corporation is typically the best way to go for many small businesses. When properly set up and maintained, both entities create an impenetrable barrier between your personal assets and your business activities. Creditors, clients, and other potentially litigious individuals can go after assets owned by your company, but not your personal assets.
If you own any kind of business, even just a side gig to earn extra income, you should seriously consider creating a protective entity to ensure any liabilities incurred by your company won’t affect your personal assets. We can help you select, put in place, and maintain the proper entity structure for your business operation.
3.
Estate Planning
While each of the
asset-protection scenarios shared above are “maybes,” there is one certainty in
life—death. It’s going to happen to all of us. And your death, or an incapacity
before it, is the biggest risk to your family’s assets. Planning in advance for
what is certain to come is a gift to the people you love the most.
So, if you’ve been putting it off, now is the time to get it handled, and we’ve made it easy for you to do that.
You work way too hard to leave your assets at risk. Call us to schedule a Family Estate Planning Session, and let’s get this taken care of now. During your Session, you’ll become educated, informed, and empowered.
We don’t just draft documents; we ensure you make the very best legal decisions about life and death, for yourself and the people you love.
Dedicated to empowering your family, building your wealth and defining your legacy,
Preparing your company for your incapacity or death is vital to the survival of the enterprise. Otherwise, your business will be disrupted, harming your customers, employees, vendors, and ultimately, your family. For this reason, proactive financial planning — including your business and your estate plan — is key. Below are some tips on how to protect your company and keep the business on track and operating day-to-day in your absence.
If you’re on Facebook, you may remember that they initiated a “legacy contact” program a few years ago. Legacy contacts allow people with personal Facebook accounts to designate someone to manage their account after they pass away. But Facebook also offers business pages. So what happens to those pages if you pass away? It’s an important question because you probably don’t want your business page to expire with you.