5 Asset Protection Strategies to Shield Your Wealth
You will agree to the fact that lawsuits are usually filed against people who have a lot of wealth. After all, what will a poor man use to compensate the aggrieved party. Therefore, any person
You will agree to the fact that lawsuits are usually filed against people who have a lot of wealth. After all, what will a poor man use to compensate the aggrieved party. Therefore, any person who has assets should identify the best strategies to shield his property. You could be having substantial assets or a beneficiary of a lawsuit, stock option sale, and inheritance among other sources of wealth. You don’t want to wake up one morning to discover that your new wealth is at stake. Here are some five asset protection strategies to shield your wealth.
1. Formalize all Informal Partnerships
You can compare business partnership to a person sitting on a ticking time bomb. As a stakeholder, you have a direct response to the actions taken by your partner just like the case of joint accounts. The challenge is that a law suit that is filed against your partner can put all your valuable assets at stake. For instance, your personal property can be at jeopardy if your partner gets involved in an accident. Make sure you formalize partnership so as not to expose your personal property at risk.
2. Raise the Liability Insurance
Insurance is the first line of defense in case of litigation. It is wise to conduct your insurance broker and increase the limits of your liability. You need to ensure that the personal liability umbrella coverage you have is equal to or more than your actual net worth. Under insurance exposes you and reduces the protection of your wealth in case a legal suite arises. You should request the insurance broker to give you an umbrella liability policy that is equal to the value of your new wealth. In fact, it is normally good to get the cover before you even receive the windfall or inheritance. You can never tell what people are planning regarding your upcoming wealth.
3. Separate Your Assets
It is good to consider keeping all your assets separately. This may depend on the source of the windfall and your state of residence. For example, you can deposit your money in a joint account with your spouse and both of you will own half of it each. You could also joint register your assets with your spouse, children and other family members. However, some people have a problem with trusting even their spouses. You can find the best way forward depending on your family relations. You could also speak to a reliable attorney and keep your assets in a different account if you don’t want to involve your spouse of family members in your assets. You should not go for joint accounts unless you fully trust the individuals.
4. Use the Right Procedures and Contracts
The acts of fraud or negligence can make creditors to attack your personal assets and pierce the corporate veil. You can avoid this by making sure that your rentals proper lease agreements, writing sub-contractor agreements, not following the right hiring procedures. The professionals you bring on board should be insured, bonded and/or licensed. Some of these professionals may include asset protection specialists, repair men, contractors and legal and tax and legal advisors just to name a few. Just make sure that you comply with the law in all your business errands.
4. Consider an Exemption for your Homestead
An individual personal residence is one of the most affordable exemptions that are available for every citizen. Most states have this statutory exemption and protect a given level of your home against bankruptcy or creditor.
Wealth protection is a critical component in the life of anyone who owns valuable assets. Some of the strategies include using the right procedures and contractors, separating your assets, increasing the liability insurance, formalizing all informal partnership, and considering an exemption for your homestead just to name a few. The strategy you choose depends you’re the nature of the industry and your current situation. The most important thing is to ensure that your assets are safe just in case someone files a law suit against you or your business partner.