Why is Asset Protection an Essential Part of the Estate Planning Process?
Asset protection is a set of strategies intended to keep your property and assets from being seized in lawsuits or from creditors. Since this is an important matter of financial security for you and your family, you should work with an established and experienced Denver estate planning attorney to build a solid and sturdy asset protection plan and ensure that nothing compromises it.
Assets Can Be Threatened By a Number of Factors
In order to understand the importance of asset protection, it’s essential to realize what causes your assets to be threatened in the first place. While this list isn’t exhaustive, the following are some of the reasons asset protection is so important:
Slip and Falls
Slip and falls are common, and people who are injured on or around your property are often quick to try to sue to make some quick money off of you. Having property insurance, for example, this is a way to protect some of your assets if someone were to be injured on your premises.
Debt is another huge factor regarding why asset protection is so important. If creditors come after you for any reason, you want to make sure you’ve done everything in your power to protect your property and assets from being able to be seized by the creditors. Protecting yourself from creditors might include the creating of limited liability partnerships, trusts, and other types of accounts that allow you to keep your money even if you find yourself drowning in debt.
Divorce can be contentious, and while no one expects a marriage to end, it’s always wise to plan for the worst. In this case, asset protection can be an important way to keep some of your own money separate in the event that the marriage dissolves. One way to do this is to create a trust, which an asset protection attorney can assist with.
Examples of Asset Protection
Your asset protection lawyer can employ various strategies like business entities, partnerships, and trusts to build a substantial asset protection plan.
Here are a few such examples:
- Insurance- insurance plans like an umbrella policy, can maximize the coverage to protect your assets
- Limited Liability Companies- LLCs offer outstanding protection from creditors. You can also set up a family LLC or a family limited partnership for this purpose.
- Trusts- trusts made for asset protection ensure better protection as the value of your assets increase. They can protect your assets from lawsuits, creditors, and judgment against your estate.
Why Early Planning is Crucial
Your assets can be at risk of several potential threats, lawsuits, and creditors. To ensure your assets’ safety, you need to ensure that an asset protection strategy is already employed before such claims or liabilities happen. As a rule of thumb, the longer your asset protection program is in place, the stronger it is. Asset protection plans can be tricky, which is why it’s so important to find an asset protection lawyer who is experienced and established to make sure that no financial harm haunts you or your family in the future. It’s always better to have a plan in place and be proactive rather than reactive.