The Secret to Asset Protection Planning for Professionals and Business Owners
No one knows when disaster strikes, but one can plan for when it does. If you’re a hard working professional or business owner and haven’t done asset protection planning, you could be prey to people who want to take what you own. So here are some secrets to asset protection planning for professionals and business owners.
You do not want what you have worked for to be taken, right under your nose. The economy isn’t what it was, and now asset protection has become a viable option for many people.
Even though we live in a litigious society, we can still use the same law to protect your assets legally. It would be best if you comprehended that you are not trying to defraud your creditors through asset protection. It is about protecting your sweat from predators.
I know by now, you might be asking yourself, “What is asset protection?” Contact our law firm to help you before you get started with asset protection.
Asset Protection Facts
In a nutshell, asset protection is about you planning your personal and business affairs in such a way that reduces the opportunities for predators to attack you.
Asset protection is both ethical and legal and does not involve the literal hiding of assets. It is about structuring and protecting your assets so that they are owned in a manner that they cannot be touched by creditors in case things do not go well.
Asset protection is a legal and complex use of business planning strategies and techniques for professionals and business owners alike.
Planning for Asset Protection
Where to start? The first thing that you will have to do is risk analysis. What are the litigation threats that you are most likely to encounter in your place of work or business? In what ways can you minimize these threats? What should you do if the risks are real?
When the threat becomes real, investment objectives and tax are used to determine which strategies will be employed.
Asset Protection Strategies
Many strategies can be used in asset protection, and here are some of them:
- Irrevocable Trust
Trusts are very good for asset protection. The irrevocable trust may be an effective trust since the terms of the trust cannot be changed once it has been created. When you transfer all your assets to the irrevocable trust, they cease to be yours and belong to the trust.
Use of Business Entities
If you are an entrepreneur or you own a business or a practice, you need to know how to separate your assets from the business assets. If you do not take the initiative and create separate business entities like corporations, limited liability companies, or limited partnerships, you might lose everything.
In general, a sole proprietorship is not a good idea since there is no separating you from the business. General partnerships are also bad ideas. If your partner has issues with someone, the business might be targeted.
On the other hand, limited liability companies may be good since you can separate yourself from the company. Asset protection LLC is possible, and creditors will not be able to acquire your assets or the company.
- Place Assets in Your Spouse or Children’s Names
If you suspect that your lifestyle is risky, you may want to transfer your assets to your children’s or spouse’s names. Often the creditors aren’t allowed to touch property in a different family member’s name. Marriage can be a good asset protection strategy.
Marriage, though, is a risky strategy because divorce rates are quite high these days. There might be another problem when you are dividing the assets.
Benefits of Asset Protection
A sound plan will have tax minimization, asset protection, and excellent estate planning. Some of the benefits are:
- Reduced liability – This happens when you transfer your assets when you think there is imminent danger. The liability will decrease.
- Privacy – Once you change ownership, the ownership of the assets now becomes confidential.
- Protection against creditors – A sound plan can shield your assets from creditors and other people who might want to come after you.
- Private transfer – If you have a sound plan, you can confidentially transfer your assets to your family members.
- Control – In as much as you would have transferred ownership to close family members, you will remain in control of these assets.
Regardless, you need to know that timing is everything. If you start the process just before a lawsuit, there is a high chance that the judge may reverse the transfers.
Asset protection is for everyone. If you need asset protection for a physician or an entrepreneur, Bazikyan Law Group has you covered.