The harsh reality is that lawsuits are common and the more assets you have, the greater your risk. Fortunately, there are some simple strategies to keep your assets safe.
For example, transferring your personal assets to an unbreakable trust or re-titling property can prevent creditors from seizing your money. Other strategies, like offshore trusts, provide more privacy and protection from U.S. legal claims if you comply with proper foreign reporting requirements.
Insurance
Insurance is crucial as the first line of protection against speculative claims that may be filed against your assets. Make sure you have adequate liability coverage, especially if you own a business or work in a lawsuit-prone profession. Also, obtain personal and homeowner’s insurance to protect your property from loss due to man-made or natural calamities. Also consider umbrella plans, errors and omissions insurance, professional liability/malpractice insurance, and cyber liability insurance.
Self-proclaimed asset-protection experts may promote seminars or kits to help you protect your money and property. However, performing extensive research and contacting the Better Business Bureau is crucial before investing.
Retirement accounts
Over the course of your career, you accumulate savings in a variety of retirement accounts. These may include 401(k) plans from previous employers, individual retirement arrangements (IRAs), Roth IRAs, SEP IRAs, and SIMPLE IRAs.
Whether you’re self-employed, work for an employer that doesn’t offer a retirement plan, or is a retiree who has left the workforce, it’s important to understand how these accounts function and what they can do for you. A financial, insurance, and a legal professional can help you make a wise decision about how to use these assets.
Investing your money in retirement accounts can boost your long-term returns. That’s especially true if you keep your assets in low-risk investments and savings options with guaranteed growth, such as fixed annuities, certificates of deposit, and treasury securities. It’s also important to consider your asset allocation, which is how you divide your investments between lower-risk assets and higher-risk ones. This mix can change as you near retirement.
Real estate
Real estate is another valuable asset that can be protected through the use of proper asset protection strategies. These strategies help to limit the risk of losing your assets to lawsuits. They also prevent a court ruling against one property from jeopardizing your other investments. For instance, you can use an anonymous land trust to avoid the legal implications of a lawsuit and protect your personal assets.
You can also take steps to separate your real estate from other assets by transferring it into a separate entity. This is called compartmentalization. It can protect your property from creditor claims and taxes. It can even prevent a judgment against one LLC from impacting your other properties.
Some of the more effective ways to protect your real estate include implementing a robust tenant screening process, checking credit reports, and speaking with references. In addition, you should hire contractors and handymen who have insurance and a good track record.
Personal property
Personal property refers to everything that is movable or not permanently affixed to real estate. It can include things like your car, furniture, clothing, and even intellectual property such as bank accounts and professional reputation. However, certain fixtures such as air conditioning units may be considered part of real estate and not personal property.
Itemizing your personal property helps you get the most out of your insurance coverage. To do this, create a list of all valuable items in your home, including specific details such as serial numbers, ages or years purchased, and make and model for computers, jewelry, and more. You can also include receipts and professional appraisals to support your claims.
Formal legal protection can further safeguard your personal assets in the event of a lawsuit or bankruptcy. Contact an experienced business lawyer for advice on protecting your assets and reducing exposure to risk.
