When should you start asset protection planning? To keep it simple, it’s best to start asset protection planning as soon as possible. As the old adage goes, the best time to plant a tree is yesterday; the same logic applies to asset protection planning. It’s better to establish your plan before any potential liabilities arise. This will help you have everything settled so that you will be financially and mentally prepared to face any challenges that might crop up. Your goal with asset protection planning is to have an airtight plan that will help you avoid even the appearance of impropriety, particularly if you come under assessment.
What Happens if You Wait Too Long to Start Asset Protection Planning?
When a lawsuit is filed, judges will typically take a look at the timeline of events. If it seems that you have been taking actions in anticipation of having a judgment against you, a judge is likely to hold you in contempt. This is not something to be taken lightly, and can result in fines, asset seizures, and even jail time. If you declare bankruptcy after having your judgment discharged, the bankruptcy court might see it as evidence of potential fraud, which lowers the likelihood of them discharging your debt. In such a scenario, not only will you be held in contempt, but you will also still have to pay off your debts.
Combining Estate Planning and Asset Protection Planning
It is extremely beneficial to combine both estate planning and asset protection planning. When embarking on a structure for asset protection, it is highly recommended to sync it up with an estate plan. It is further recommended that both of these plans be established by the same team for continuity. In an ideal scenario, both plans will operate together to avoid potential legal conflict when it comes to probating your estate and distributing assets. The advantages of good asset protection techniques in estate plans are not something to overlook.
Steps in Asset Protection Planning
- The first step involves meeting with your financial advisor and attorney to understand what your assets are and how to best safeguard them.
- Understanding your assets may include setting up a trust, corporate structures that allow share transfers, moving your assets into retirement accounts, and other processes.
- The final step is then making said transfers – this is a step that necessitates advanced and robust planning, and it might take months for everything to be set up and running. Because of this, you’ll want to be working with an experienced team.
Asset Protection Tools
An Asset Protection Trust, LLC or Limited Partnership typically refers to a legal entity that is used to place or hold assets to protect them from outside threats. This protects the asset from legal claims. Once the transfer is made to a third party, the party that has made the transfer interrupts ownership, making it more difficult for claims to be collected. That party will still have the benefit of using that property during their lifetime. For instance, if a party transfers property to a trust, they will still have the right to live and maintain said property.
For additional information on asset protection and wealth creation services, we recommend contacting us at Protect Wealth Academy today!
