If You Have Assets Other Than An IRA You Need An Asset Protection Plan
Most people rarely think of setting up an asset protection plan.
It is much more common for the majority of people to establish wills in order to distribute whatever assets remain after one passes. However, it is much less common to consider an asset protection plan to keep your assets from being drained by an unexpected lawsuit.
I’ve made the distinction of assets outside of an IRA because IRAs are protected by federal law from most lawsuits. Under the Bankruptcy Abuse Prevention Act of 2005, up to $1million of a defendant’s IRA will be protected. However, if you owe child support or back taxes to the IRS, you’re out of luck. Domestic relations lawsuits will lift IRA protections anywhere you reside within the country.
You could end up losing everything if your assets are not protected.
If you have a home and a couple of vehicles, those are the items that will be at stake in a lawsuit.
Let me be clear though. IRA protection varies state by state. 401(k)s can be a better bet depending on the state in which you live. The fact is, as long as you are a law-abiding citizen, you simply want to protect your assets in the event of some tragic event that would cause someone to sue you. That could be an automobile accident, someone slipping on your deck or down the stairs of your home where someone is seriously injured, or heaven forbid, killed.
No one can predict the future and what events will or will not happen.
Asset protection planning is simply a method of ensuring that you will have your retirement assets when you retire. Typically, an asset protection plan will also take into consideration long-term care needs. Another area of concern many people avoid.
If you would like to discuss asset protection in greater detail, give us a call.