Asset Protection

Asset protection planning is a very important but misunderstood and underutilized concept.

Classic “asset protection” is the concept of protecting your personal assets from lawsuits. Lawsuits that are most typical are “negligence” suits.

What can cause negligence lawsuits?

• Cell phones—cell phones have become the biggest new issue when it comes to asset protection. 
• Property ownership—if you own a home, vacation condo, rental property, etc., you have premises liability issues.
• Professional liability—if you are a doctor, lawyer, CPA/EA/accountant, architect, etc., you have “personal liability” that can’t be shielded through the use of a corporate entity.

Protecting assets from creditors?

The bread and butter domestic asset protection tool is a Limited Liability Company (LLC). The key to using LLCs to protect assets is to:

 1) make sure it is a multi-member entity; 

2) make sure it is set up in the correct state (one that limits the remedy of a creditor to a “charging order”); 

3) make sure formalities in formation are followed (don’t just set one up yourself on the internet).

What assets should be LLCs?

• brokerage accounts
• rental property
• vacation condos/homes
• IRAs (depending on the state you are in)
• anything else of value

When using LLCs you should always separate liability assets from non-liability assets. 

Other creditors, you should protect yourself from??

• IRS—your biggest guaranteed creditor every year is the IRS. 
• Stock Market—you are more likely to lose money in the stock market in any given year than being sued for negligence. 
• Long-Term Care Expenses—Over 50% of people 65 and older will incur expenses related to long-term care.

   

   

Need help?

If you would like an assessment of your asset protection plan or lack thereof, please feel free to contact our office to set up an appointment.