Asset protection involves keeping your personal and real property safe from being taken by creditors, particularly those who would win a lawsuit against you. The lawsuit could result from virtually any type of action, including a car accident, slip and fall situation, or even when you are involved in a foreclosure action.
Some people assume that asset protection planning is only for those who are extremely wealthy or engage in high-risk activity, but this is not true. Anyone can benefit from a carefully crafted asset protection plan.
The Importance of Asset Protection Planning
You are at risk of being sued at virtually all times. This is especially true if you own real estate or a vehicle. If anyone injures themselves on your property or because of your driving, they may have the ability to sue you. This risk is even greater for those that own small businesses.
If the individual obtains a judgment against you, then you must pay as the court orders for their losses. These amounts could be staggering. Insurance will often help, but it may or may not cover all of the costs associated with the suit. Instead, the judgment creditor can attempt to sell your property in satisfaction of the ruling. If your assets are adequately protected, then the judgment creditor may not be able to affect your property at all.
How Can I Protect My Assets?
You can protect your assets by moving them so that creditors cannot reach them. It could mean putting an asset into a trust or creating an LLC or other entity to own the property. It could also mean providing loved ones with gifts as well. Proper planning may mean that a judgment will not affect your daily life or your ability to care for yourself or your loved ones.
When Should I Start Asset Protection Planning?
The easy answer is: As soon as possible.
The asset planning process should start long before you are concerned about a lawsuit on the horizon. Preparing when there are calm waters can help prevent problems in the future.
Failing to plan ahead can actually be considered fraud if you deliberately move assets out of the reach of specific creditors just before or during a pending lawsuit. The court can set aside your asset protection plan entirely in some situations if you start planning too late.
For more information about asset protection planning, give our team a call at 732-281-0060. There are a variety of ways that you can engage in asset protection planning, and we can help you decide which financial tool will work best for your situation.