Defending yourself from future creditor claims requires a type of financial planning known as asset protection strategy. Small businesses and individual citizens can utilize asset protection in mitigating creditors’ access to their most valuable assets. If you’re a business owner, asset protection is especially crucial. Any business entity has to ensure their company’s continuity. That’s why loss prevention is one vital precaution to take.

The problem is that just very few people consider setting up protection for their properties and other types of investments and wealth. Often, they only realize its importance when it’s already too late to salvage their assets. That being said, the best thing to do is to take advantage of asset protective services to safeguard personal assets. These asset protective services serve as a legal precaution that defends your interests from legal actions.

If you’re on the fence as to whether you really need asset protection, check out below the reasons why it’s essential to have one.

1. Gives Overall Protection to Your Money

Without realizing it, many people are actually looking for asset protection when they seek means to protect their hard-earned money. They worry about their money’s safety, but keep on shunning strategies for protecting their assets. The truth is that ensuring the safety of your money is one part of asset protection. That’s because financial planning results in asset protection. In its simplest form, asset protection is any method that protects one’s wealth from dissipation and loss due to life’s many uncertainties.

2. Separates Business Properties from Personal Assets

Separating personal properties from your business’s allows you to shield your assets from creditors and litigation. It brings the focus on your business properties, so lawyers only go after what’s covered by your business and not every asset that’s under your name.

The use of the LLC or limited liability company can help. The owners won’t be accountable for the lawsuits and other liabilities of the company in such a business structure. In an LLC, the owners are also the members of the company. You’ll be safe from paying your company’s debts, and you won’t be forced to liquidate any personal assets.

Another option for securing assets that sophisticated business owners take is offshoring their LLCs abroad, like in the Caribbean island of Nevis. The island has a successful asset protection track record and is a jurisdiction committed to safeguarding its overseas residents’ assets from creditors. Go to www.milehighestateplanning.com/nevis-llc to learn more about Nevis LLC offshore asset protection.

3. Prevents Asset Distribution in the Event of a Divorce

Divorce is one of the harsh realities of this world. However, no one plans on getting a divorce from the beginning of the marriage. That’s why many people fail to plan for the future and don’t seek pre-divorce protection. The truth is that despite how you might feel in the present, you must protect your future.

Divorce is actually one of the leading causes of asset distribution. It can be a complicated mess and a top wealth buster. It’s best to transfer your separate property’s ownership, including your income and business, into an asset protection strategy in advance. Some even do it before tying the knot. It more effectively guarantees your assets’ protection. If you have a divorce asset protection plan, your position in the marital vs. separate property battle will be strengthened in the event of a divorce.

4. Safeguards Your Home from Creditors

Unfortunately, the family home is almost always the first asset that creditors look into possessing if someone can’t repay a loan of equal value.

How do you safeguard your home from creditors?  Well, there’s a couple of options that you can take. First, check if your state has a homestead exemption legal provision. Homestead exemption prevents creditors from enforcing your home’s sale. Depending on your specific state’s statute, homestead exemption may also relieve your spouse from property tax after your death.

The second option for preventing creditors from taking your home is to take advantage of the DAPT or domestic asset protection trust. You can set your preferred beneficiary through the DAPT. The chosen beneficiary will be able to access your assets, such as LLCs, cash, and, of course, real estate, under the irrevocable trust’s protection.

5. Gets Nursing Home Costs Covered without having to Spend Down Your Assets

Nursing homes aren’t covered by Medicare and most other types of insurance. It can be a problem since getting admitted to a nursing home can be costly. What happens is that people who need nursing home care are forced to spend down their assets. Medicaid then begins to pay for them once all the money is spent.

When determining your eligibility for Medicaid, an asset protection plan prevents your property from counting. You’ll be eligible for Medicaid coverage while your assets stay intact.

Conclusion

It’s important to have a personalized asset protection plan that’s designed specifically for your needs. Chances are you’ve already taken out insurance policies for your car and home, so why not do the same and protect your wealth and real estate?

 

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