When people think of estate planning, they often think of it in the context of what happens to their estate after they die. While that is a crucial part to estate planning, it is not the only consideration. Estate planning can also include planning while you are alive, such as “asset protection” planning for example. If you want to protect your property after you die, then why not consider protecting it while you are alive?
Asset protection planning involves devising legal strategies to keep your property out of the reach of creditors. If you were to face a lawsuit brought by a creditor, your property could be at risk without an asset protection plan.
Why do your assets need protection?
Unfortunately, losing your wealth can at times be a lot easier than acquiring it. Our society is as litigious as it has ever been. Lawsuits can be filed for seemingly any reason, even ones that seem outlandish. If you are unprepared, then you could face having a creditor, even if you did not intend to do anything wrong, if you just “made a mistake,” or if you were ignorant of potential liability. This becomes particularly relevant when it involves your business affairs.
Waiting until something like this happens or thinking to yourself “that will never happen to me” can be detrimental. Once a creditor is on the horizon, then it is too late to protect your assets and any transfer of property you make in attempt to shield that property could be deemed a fraudulent conveyance. The right way to do asset protection planning is when you do not have a creditor. As has been said, “there was no flood when Noah built the ark.”
How does asset protection planning help in cases of incapacitation or death?
Asset protection planning is also an effective way to protect your family’s financial interests if you become incapacitated or when you pass away. For example, if you face significant health care support and need to rely on government aid for that support, then the government may have greater claim to your property in granting that support if you do not have certain planning in place. Furthermore, even if you live your life safely and die without creditor claims, what happens when your beneficiaries inherit property from you and have their own creditor problems?
Asset protection planning can also be useful in these types of scenarios. Through proper planning, you can potentially safeguard your assets upon your incapacity and even after you die. Although asset protection is not for everyone, you owe it to yourself to consider it and to plan ahead for the unpredictable. Working with an experienced asset protection attorney can help you explore and understand your options.