First Comes Financial Planning Then Comes Asset Protection
There is an order to planning for your financial future.
In life and love there is an order to events. First comes love, then comes marriage. Likewise in financial planning, first comes a solid financial plan, then comes a well thought out asset protection plan.
You can’t do it backwards. You first must have assets to protect. By definition, asset protection means keeping your property safe from being taken by someone who wins a lawsuit against you.
You also cannot begin an asset protection plan if you are in the midst of a lawsuit. That can be constituted as fraud and is a serious crime.
No one wants to be sued. Most people think that it can’t or won’t happen to them. But if you are in an accident caused by you and someone is injured or killed, chances are you will be sued.
Once you have accumulated assets, you then hire an asset protection attorney to help you determine which assets are exempt and which are non-exempt and how to properly protect all of your assets.
Not A Substitute For Insurance
Asset protection planning should not be a substitute for personal liability and professional insurance, but rather should be in addition to insurance. Insurance supplements asset protection planning. If you get sued, let the insurance company pay to defend it and pay to settle it — that’s what you’re paying the premiums for.
Asset Protection Doesn’t Prevent Suits From Being Filed
Some people think that having an asset protection plan works to frighten anyone initiating a lawsuit. That certainly is not the case. And even if you do have asset protection, that plan does not make you immune to legal fees required to defend yourself against a lawsuit.
Personal Assets And Business Assets
The most common method for protecting personal assets is through the use of trusts. Sometimes, people are advised to put their personal assets into a business entity. This is ill advised and if the court discovers this, it could be detrimental to your case. As I just mentioned, the place to put personal assets is in a trust. There are many different kinds of trusts and a solid body of law that protects trust assets only when the trust is properly drafted and funded.
A Balance of Asset Control
Asset protection planning attempts to reach a balance between giving you sufficient control so that your assets don’t disappear, while simultaneously not giving you so much control a creditor can successfully argue against you in a court of law. Making use of legal tools to protect your assets is generally not something that you should try to handle on your own because of the potential for mistakes and problems. Instead, you need to get the right legal advice from a qualified estate and asset protection planning professional.