The basics and what you need to know about asset protection.
work our entire life to accumulate some personal assets that will allow
us to enjoy ourselves as we get older. The threat of a lawsuit, even one
that has no merit, is certainly a concern, as just one suit could easily
wipe out all the money that you’ve worked so hard for.
With the threats of these suits building every year, there a number of
simple steps that you should take to protect their assets from
illegitimate creditor claims. You can start right at home by reviewing
and beefing up your liability coverage on your homeowners’ and auto
insurance policies. Many may choose to go a little further by purchasing
an umbrella policy providing additional liability coverage that will
cover limits above your primary policies.
first rule of thumb in asset protection is to make sure that take
preventative action with your valuable assets before you have a creditor
knocking at your door. Once an actionable claim has been made, hiding or
shielding assets may end up causing you more harm than good if
litigation takes place. You need to have your plan of action in place
before there is a problem. A court may find questionable transfers as
fraudulent, exposing those assets to the judgment creditor.
The basic rule of thumb to consider is that the more you have to
protect, the more complicated your protection will be. If you fall into
this category, it’s strongly advised that you should hire competent
counsel and a professional financial adviser to assist you.
As a homeowner, your insurance policy protects you from financial loss
for you actions on your property or for property damage. Your auto
policy performs the same function for anything related to your
automobiles. Liability covers bodily injury, property damage and some
additional expenses of other drivers, their passengers and your
passengers should you or a driver covered by your policy causes an
accident. If you’re seeking higher limits you may want to consider an
If you’re a renter, you still have important considerations with respect
to insurance. Your landlord’s insurance will not cover a renter’s
personal property. In addition to covering you contents, a renters’
policy will cover additional living expenses if a fire or other
circumstance forces you to move temporarily. Renter’s insurance can also
provide liability protection from someone claiming injury while in the
For a business owner, consideration needs to be given to how the company
is held. Creditor protection can be accomplished through the formation
of a C corporation, S corporation or L.L.C. In those type of entities,
the shareholders have limited liability and can only lose what they’ve
invested in the business, while personal assets aren’t subject to
liability. This is completely different than a sole proprietorship,
which would leave the individual owner wide open for unlimited personal
liability for all business’ debts. If in fact you operate as a sole
proprietor, it’s crucial that you have an umbrella liability to cover
any disasters of the firm.
You do have some protection of you assets under the law. Your wages may
be garnished only to pay child support, back taxes and defaulted student
loans. Asset accounts such as retirement plans, profit-sharing plans and
pensions can’t be seized by creditors. Creditors are also not allowed to
touch the cash value of a life insurance policy or to attach the death
benefits from the policy.
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resources and links
relating to asset protection. Whether you a real
estate developer, real estate
owner or any business owner looking to better
educate themselves on how to protect their assets, we're sure you'll
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