Shielding wealth made easy with 6 Asset Protection Strategies
In today’s world it is fairly easy to lose everything at the drop of a hat when you don’t have a plan of action to prevent or cushion the fall. It takes hard work and perseverance to build wealth, and the more assets that you’ve managed to collect, the more susceptible they are to attack.
Who primarily needs asset protection?
- Well, high net worth individuals in particular need to be mindful of their assets and do their best to protect them from market downturns, as well as others who are trying to make a fast buck by conning them.
- Besides wealthy people, business owners also need to look at ways to protect their business and its earnings. Operating a business can be risky – certain defaults and neglect in terms of services can strip business owners of their wealth, and in some cases their personal assets too.
Asset protection is not just for professionals and entrepreneurs but even individuals who might be looking at monetary gain in the form of inheritance, or a lottery winning. Those who expect a windfall of any sort must realize the importance of asset protection strategies to prevent themselves from getting burnt.
6 Asset Protection Strategies to Help You Get Started
Here are 6 simple ways to protect your assets and wealth:
Invest in Liability Insurance
Whether it is about protecting personal assets or business wealth, liability insurance is the first and best option to rely on, which is why it happens to be on the top of every asset protection plan.
- What is liability insurance? It’s a plan that acts as a safeguard that covers sudden windfall.
- What does liability insurance cover? Since only the covered amount is safe from creditors, consider either purchasing or increasing the limit of the insurance coverage to that of the grown wealth, in order to protect it.
- Limit Exposure by Dividing Your Assets
Lots of creditors pose a threat to overall assets in hand, and so it’s a very good idea to separate assets, keeping only income assets and giving your spouse or partner the sole ownership of the family investments and other valuable assets. By doing so, your substantial personal assets can be protected from creditors and help to keep wealth within the family.
- Remember that Renting can be Risky Business
A lot can be done with sudden wealth, and investing it requires research as well as a contingency plan.Considering whether to invest in rental property, or simply owning it, brings about the need to protect it. Creating a business entity such as a corporation or a limited liability company can shield your personal assets and protect you as the property owner. Title insurance can also go a long way to protect an owner’s financial interest in property.
- Formalize Any Informal Business Partnerships
An informal business partnership gone wrong can leave all your personal assets as well as business wealth susceptible to depletion, in case the matter is taken to court. Simply registering the business entity with the state in order to formalize the partnership is a simple and necessary step towards asset protection.
- The Dilemma of Jointly Held Accounts
Just like informal business partnerships can break, leaving bank accounts empty, marital issues can lead to separation or divorce, which doesn’t end too well for other family members and has the potential to dry up bank accounts too. So, when expecting a windfall, it’s a good idea to not transfer those funds into jointly held accounts.
- Shield Assets with Business Entities and Trusts
Creating a limited partnership, a limited liability company or corporation limits the liability of the company to solely the business assets. There is also the option of using an irrevocable trust, this puts the trust in charge of the property. While a revocable trust could get in the way of asset protection as it is open to amendment.
These asset protection strategies cover various asset protection aids and formats, so you should definitely consider them when you’re expecting a windfall. Remember, asset protection is an important part of building wealth and maintaining it!