If you are likely to become the inheritor of a small fortune, you may want to explore your wealth protection options. Protecting wealth should be your primary concern as you acquire a new inheritance. There are many competing interests globally and locally, and once you receive a certain amount of wealth, you become a target. Protecting your wealth doesn’t just refer to individuals, however. It may also refer to the government or other interested institutions. Here, we’ll look at six pertinent tips for individuals to leverage when protecting their wealth.

Here are 6 Tips To Protect Your Assets:

1. Separate Your Assets

If you are married and become the inheritor of a windfall, it will likely become half theirs on the deposit of this money. Of course, this fact is assuming that the account you have is a joint account with them. Keeping the assets separate means setting them up in a private account held solely by you. For many inheritors, this particular issue isn’t that big of a problem, but it can pose a significant hurdle for others.

There are different taxes that you would be required to pay on your inheritance. This means that if you are inheriting cash, property, or any other movable or immovable assets, states wise taxes will apply. Having a legal expert that can take you through the Michigan inheritance tax will help you in multiple ways. If you do not have a legal understanding of the same, you can invite fines, penalties, and other serious actions from the authorities.

If you have children from a previous marriage and mix an inheritance you get in conjunction with your new spouse, the children of that prior marriage may also be entitled to some of the proceeds upon your death. If you would prefer to keep the inheritance utterly separate from your spouse, then consult an attorney to set up an individual account or trust where it can be stored away secretly.

2. Don’t Store Your Windfall in Joint Accounts

Joint accounts have a nasty side-effect of being an easy target. If you store a windfall you get in a mutual bank account you keep with someone else, it’s likely that the money you put in there could be accessed by the other party. It doesn’t need to be a spouse. It could be a relative or a child. Introducing a second party to be a part of your windfall’s executor might seem like a good idea at the time, but it carries with it some severe complications.

Investopedia notes that joint account holders both have access to all funds and share collective responsibility for the account. This fact means that if the person you’re holding the join account with becomes liable for something, then your funds fr4om the windfall may become part of the settlement. Joint accounts are a terrible practice if you want to protect your wealth.

3. Get a Business Entity Registered

Limited liability companies or LLCs are among the most straightforward business structures to get up and running. By paying an agent a small fee, you can register an LLC in areas where tax rates are favorable. You don’t even need to reside in the state you register the LLC in. You can simply assign someone to be the registered agent to handle correspondence on behalf of the business itself. LLCs also offer members many benefits, including pass-through taxation, which may be crucial if you want to continue to grow that inheritance.

If you own a business without a structure, it’s probably a sole-proprietorship. You might think of keeping your assets under the company’s protection, but for a sole proprietorship, those protections are non-existent. Instead, it would help if you considered registering an LLC that allows you to protect your assets from any liabilities. However, The Houston Chronicle mentions that some states have legislation in place that will enable individuals to “pierce the corporate veil” to get access to the members of an LLC individually. There are limits to the protections that LLCs extend.

4. Formalize Your Informal Partnerships

If you’re in business with someone else and there isn’t a legal structure in place for the partnership, you’re sitting on a potentially disastrous timebomb. As partners without defined roles, a lawsuit on your partner may drag your personal assets into the settlement. Defining each of your roles within the partnership can help protect you against any issues like these. It can also ensure that your assets are covered in the case of liability. LLCs are also suitable for these situations.

5. Seek Protection from Renters

If you’re looking at REITs or other real estate investment schemes after getting your windfall, you may want to consider starting up an LLC as a holding company for those properties. If you have a disgruntled renter who wants to sue you for damages, the LLC ensures that only the company’s assets can be subject to the settlement. All your individual assets, including other property you hold privately, can’t form part of the tenant’s suit or settlement claim. Nevada and Delaware both have specialized business registrations called Series LLCs that allow for multiple properties to be held in their own specific company.

6. Raise Your Liability Insurance

Insurance over a windfall may be well worth the investment. Your insurance broker should be able to cover your inheritance for a small fee. It would be best if you verified that your umbrella liability insurance is at least worth as much as you’d be getting from your windfall. Typically, you can manage to ensure millions of dollars with only a few hundred dollars per million of inheritance. The phone call typically takes less than five minutes, and you should do it before the windfall actually comes into your possession.

Better Safe Than Sorry

When it comes to protecting your inheritance or your wealth, you will always need the advice of others. Insurance is one way to save yourself from liabilities, but they are limited in what they can protect you from. LLCs offer a more comprehensive range of protection, and in some cases, they can be used to protect your business partners and yourself. Whatever you decide to invest your windfall in, you should always be aware of the threats to your wealth.

People who come into massive amounts of wealth in a short period have the trouble of deciphering who or what is worth their money. Between investments in new businesses or existing income funds, a newly-minted wealthy individual should be wary of falling prey to unexpected liabilities.

Read Also:

• How to Support Your Business
• Use Protection: How to Avoid and Handle Business Lawsuits
• Worthy Investments – 5 Things You Won’t Regret Spending Money on in Your Business
• Protect Your Business Finances By Properly Insuring Your Assets
• Being Charged with a Felony – Steps you Need to Take to Protect your Business and Career