Five Asset Protection Tips
Protecting your assets is an important part of estate planning. You worked hard for your assets, and with some careful planning, you can reduce your tax liability and protect your assets from liability. While it is never possible to completely limit your liability from a devastating lawsuit, there are ways that you can protect your personal assets. Doing so is especially important if you are in a profession with a high risk of lawsuits, such as doctors. If you have already been sued in the past, you are likely interested in ways to protect your assets in the future.Engage in Asset Protection as Soon as Possible
As with any type of estate planning, the sooner you begin planning for asset protection, the better. Many of us are so busy that we do not consider asset protection until we are facing a lawsuit that could destroy our financial lives. The best time to prepare for lawsuits is now. Even if you are young in your professional career, it is important to consider how you can protect your assets so you can enjoy the retirement you deserve.Set Up Multiple Entities
If you are in a high-risk profession when it comes to lawsuits, you may benefit from setting up multiple legal entities. These legal entities can act as firewalls to protect your assets. For example, if you own a restaurant franchise, 10 rental properties, and an interior design company, it is wise to own these assets in separate legal entities. That way, if someone brings a lawsuit against your restaurant, they will not be able to access the assets owned by the other businesses.
You may be able to hold multiple assets in one limited liability corporation, or your lawyer may advise you to set up multiple limited liability corporations or corporations, depending on the amount of equity owned by each business. You will still be able to hold stock in the corporation or remain a controlling member of the limited liability corporation, but you will be better protected from liability. An estate planning lawyer can help you determine how to structure your assets so they will be protected in the long run.Considering Owning Offshore Accounts
If you want significant liquid assets, you may want to consider offshore asset protection. When you place your funds outside of the United States in an international financial institution, courts may not be able to seize the assets if you are subject to a damage award. There are some downsides to moving your assets offshore, and your lawyer will be able to explain the pros and cons of doing so. When moving accounts offshore is done right in a legal way, it can be incredibly beneficial.Keep Your Finances Private
Most of us have heard the stories about billionaire Warren Buffett driving an old beat-up car. There may be some wisdom in not owning flashy items when you own significant assets. Posting pictures of your latest business successes, flashy cars, and vacations on social media has become a popular practice. However, making your wealth well-known can attract attention and encourage people to pursue lawsuits against you. When people assume you make a lot of money, they are more likely to try to come after you through a lawsuit. Keeping your finances as private as possible can help you protect your assets.Do Not Rely on Bankruptcy
In the 1980s and 90s, many people counted on bankruptcy as a means to bail themselves out of lawsuits or other devastating financial blows. Doing so is risky because of recent bankruptcy laws. Now, many people who would have been able to file for Chapter 7 bankruptcy must file Chapter 13 bankruptcy and engage in a lengthy, multi-year debt repayment plan with the bankruptcy court.
In many cases, people will not keep their homes because new bankruptcy laws reduce the homestead exemption. Some states offered debtors 100% homestead protection, allowing the debtor to keep all of their home equity. This is no longer the case. If you need to file for bankruptcy, you may risk losing your home and vehicles. It is best not to depend on bankruptcy as a way to protect your assets.Contact Our Charlotte Estate Planning Lawyers
The best way to protect your assets is to discuss your situation with an estate planning lawyer. At Arnold & Smith, PLLC, we will review your financial situation and develop a customized asset protection strategy on your behalf. Contact us today to schedule your initial consultation at our Charlotte, Mooresville, or Monroe offices.