Depending on your situation, your estate plan might require you to include one or more asset protection tools. Asset protection is the term that describes the steps people take in order to keep as much of their money or property as possible when faced with those who would seek to take it through legal action. In other words, asset protection is about protecting what you have against lawsuits and creditors. To help you determine if asset protection is something you should consider, here are several questions you’ll want to ask yourself.
Do you have a lot of assets to protect?
This is the question that all asset protection plans need to begin with. If you don’t have a lot of assets, or don’t believe you will have many assets in the future, you probably don’t need to spend much time thinking about asset protection. On the other hand, if you are financially well-off or believe you will be so in the future, creating an asset protection plan is very important. Though people can file a lawsuit for almost any reason and at almost any time, they usually don’t do so unless they believe they can recover some money. Because of this, wealthy people are much more likely to be named in a lawsuit than those who don’t have a lot of assets.
Is your profession or business at a high risk of being sued?
Some businesses and professions are more likely to be the subject of lawsuits than others. Many types of jobs in the health care industry, as well as in finance, law, and construction are all more prone to litigation than others. If you work in one of these areas, or own a business related to these fields, asset protection is essential. Not having the right plan in place at the right time can expose you to substantial risk.
Are you experiencing difficulty in your personal or financial life that might require asset protection?
Asset protection strategies can benefit a lot of people, especially when they are going through, or are about to go through, difficult times in their lives. If you are considering filing for bankruptcy, have a marriage that could possibly end in divorce, or learn that you have a serious medical condition that will likely leave you incapacitated, asset protection planning can help you.
However, if you’ve already been named in a lawsuit or believe that you will be shortly, your asset protection options are very limited. You cannot try to hide your assets from creditors, but you can take steps to help keep as much of your possessions as possible down the road. For more information about what asset protection is and what you can do about it, talk to your estate planning lawyer as soon as possible.