18 May Is Asset Protection Only for the Wealthy?
By: Barry E. Haimo, Esq.
May 18, 2015
Is Asset Protection Only for the Wealthy?
Asset protection is not only for the wealthy; it doesn’t require extraordinary wealth. If you have assets, you want to protect those assets, so they go to your family and not to creditors.
What Is Asset Protection?
Asset protection is a way to protect your wealth from the claims of creditors. If you owe someone money, they become a creditor. You may run into situations with creditors if you take out loans, lose a lawsuit, breach a contract or cause injury to someone or someone’s property. Learn more about creditors here. Without asset protection, your assets are vulnerable to these creditors. Since you have the right to take assets off the table from them, why not do so?
Examples of assets may include, but are not limited to:
- Land or buildings
- Savings accounts
- Mutual funds
Protecting your assets does not just benefit you, but it also benefits your loved ones and future generations of your family. They can cover funeral costs, be passed down as inheritance, or give your children a source of income (if you have a business entity.)
Asset Protection Is for Everyone
Many people are hesitant to look into protecting their assets; they may think it is unethical or that asset protection is reserved to the wealthy.
Without protection, assets can be threatened by lawsuits, divorce, or bankruptcy; these are situations anyone could experience, regardless of wealth. Your assets are all you have to give your children, even if you own a small business or you are still paying back substantial loans. In some cases, having fewer or less valuable assets increases the importance of preserving them.
Asset Protection Basics
Asset protection is important for your personal assets, as well as your business assets. If you have a small business, you can still use different business entities to protect your small business, as well as your personal wealth.
Examples of business entities to consider include:
Separating your business assets from your personal assets is a big step in asset protection planning. However, you don’t need a business to begin protecting your assets. There are a myriad of ways to protect your assets, with some more appropriate for various lifestyles than others.
The most common strategies for personal asset protection include:
- Purchase insurance (Homeowners Insurance, Life Insurance, Long-Term Car Insurance, etc.)
- Separate your assets
- Utilize your retirement accounts
- Qualify for homestead exemptions
- Utilize trusts
Irrevocable trusts are the most common trusts used in asset protection, but there are many types of trusts to consider when protecting your assets and planning your estate.
Asset Protection in Florida
There are many Florida state laws that allow unlimited protection in certain asset protection situations. For example, there is unlimited protection to assets in cash value life insurance policies, as well as your primary residence or your Homestead. Protecting your assets is especially beneficial in Florida.
One of the first rules of asset protection is to begin the process early. If a claim has been made against your assets, it may be too late, and your assets will be at a high risk. Protecting your assets now can benefit you and your family for generations to come. Contact an experienced estate planning attorney to discuss your assets and how they can be protected today. Don’t wait until it’s too late.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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