Asset Protection 101: What Is It, And How Do I Protect My Assets?

What is asset protection?

Asset protection is a way to safeguard your net worth by creating legal barriers that prevent others from taking your money, property and other assets. It also helps to ensure that your assets won’t end up in the hands of someone else, such as a predator creditor, divorcing spouse, or the government.

What Is Asset Protection?

It is a process that involves protecting your assets through various methods. These methods include insurance, trusts, and other legal structures. You can use these methods to protect your home, car, business, retirement accounts, and more.

The best approach is to use layers of protection. Liability insurance is always the first layer. But insurance has limits and it does not cover everything. For example,

Why Should You Care?

You could be wrongly accused of sexual harassment or a criminal charge and insurance will not protect you (even if you are innocent). There are predator creditors out there who make a living of suing other people. It doesn’t matter how good a person you are. They can make your life miserable for years as you get dragged through the court system. If your assets are protected, at least you know that you won’t be wiped out.

If you own any type of asset, you should care about asset protection because it protects your assets from being taken away by creditors, lawsuits, or divorce.

The Basics of Asset Protection

The basic idea is that what you don’t own can’t be taken from you. Or as John D. Rockefeller once stated, “Own nothing, but control everything.” Using this principle, we help transfer ownership of your various assets so you don’t actually own them. However, you have ways to control the assets, borrow from them, and unwind or change the structures in the future if you choose.

We use various legal entities to do that. Very traditional structures include trusts, limited partnerships and LLCs. This gets pretty complicated, and it beyond the scope of a blog post. But here is just one example. Let’s say you own an expensive house. The equity in your house is way beyond what the homestead exemption would protect. If you transfer it to an irrevocable trust, then you are vulnerable to the trustee stealing the house. (Of course, they aren’t supposed to do that. But since when has that stopped anyone from doing the wrong thing?)

So here’s what you do. You transfer your house to an LLC that is owned by the irrevocable trust. And you are the manager of the LLC. You also have a rental agreement to make it all legitimate.

Now you have control of the house. But it is outside your name. Again, this is just a very basic example. To find out more about this and other ways to protect your net worth, give us a call at 602-443-4888.

How Does Asset Protection Work?

Asset protection is a process by which you transfer ownership of certain assets to another party so that those assets cannot be seized by creditors or others. This is done through legal means such as trusts, wills, and life insurance policies.

Ready to Bulletproof Your Net Worth?

If you’re concerned that someone might try to take your assets from you, give us a call. We use tried and true methods that have proven effective for generations. Call us at 602-443-4888. Or use our convenient Contact Form. We’re here to help.

ABOUT THE AUTHOR

Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.

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