Protecting Your Assets Gains Peace of Mind
Today’s society is often a litigious one. You are never more than one mistake away from putting everything that you have worked for at risk in a lawsuit. As a litigation firm, our attorneys are well aware of this. We have filed bankruptcy for many clients who never ever thought that they were at risk of losing everything. Most of those types of bankruptcies could have easily been avoided by a bit of pre-planning.
Perhaps you anticipate a significant tax debt one day for forgiven student loan debt. Or you are married and one spouse suffers a significant medical event that potentially could wipe out all assets leaving nothing for the remaining spouse or eventual heirs.
Identity theft is another reason why you should take measures in advance to protect your assets.
Insurance has policy limits or denial of claims provisions that often will deny coverage, thereby putting your hard earned assets at risk. When someone obtains a judgment against you, it will be your assets that they are able to come after to satisfy a judgment. We help our clients place their assets in protected categories of assets so they are not at risk.
If you work in a profession that is prone to lawsuits, you are even more at risk. Your malpractice insurance may only provide you with so much protection. If you are starting or growing a business and have to personally guarantee loans, you may also be at risk of losing your assets if things do not work out as you hope.
Advanced asset protection means that things do not have to be this way, and you do not need to place yourself at the same degree of risk. You may have some risk, but it is minimized as much as possible. You can build a fence around your assets so to speak.How do We Build that Fence?
We may alter the form of ownership of the assets, or the location of ownership in order to make it difficult or impossible for creditors or judgment holders to reach your property. Sometimes these various structures will have a degree of separation or will move the assets into entities that limit your amount of liability. There is no one magic step that you can take that can give you absolute protection over every asset that you have. But there are strategies that you can take to drastically limit your exposure. Ideally, you should take these steps well prior to any event, lawsuit or insolvent situation.Why is it important to Have Professional Advice?
The first step is to find an attorney who practices in the field. An attorney with experience in litigation, bankruptcy and asset protection/estate planning is ideal. We know what happens when things go wrong. We see this every day. We know how to avoid it – there are so many times in the 2008 real property crash that we saw clients lose most everything, when they seemingly had it made before their downfall. If they were young enough, there was time to make it all back. If not, well, those clients didn’t fair so well when they had to close their business and file bankruptcy.
Finding an attorney who has experience spread across multiple legal disciplines is very helpful since there is no single way to ensure asset protection. If you choose to consult with Christie D. Arkovich, P.A., we will meet with you (via phone, Zoom conference or in person) to better understand what assets you have, listen to your short and long term goals, and prepare a plan to protect each asset.
Some of the strategies may to be utilize tenancy by the entireties protections, LLC or multiple LLCs, insurance, protected retirement accounts, and various trusts.
When is a Trust Necessary for Asset Protection?
Another asset protection strategy is to create a trust. This will mean that you grant property to the trust, and it is under the control of the trustee. Trusts can be either onshore or offshore. There is a greater degree of protection for offshore trusts, but they are more expensive to establish. The trust essentially becomes an identity separate from the grantor since it is a new structure with control that is separate and distinct from the person who has beneficial ownership of the assets.
Additionally, you can move some of your assets into accounts that enjoy statutory protections from creditors. For example, retirement accounts are protected from judgement creditors in some states (but not necessarily from a bankruptcy court above a certain amount). Further, some annuities and life insurance policies are protected, provided that they are for the benefit of the person who is seeking to shield their property. You can also transfer property to your spouse's name or hold the property jointly with your spouse. Florida has an excellent joint tenancy protection known as tenancy in the entireties which may be enough to shield certain assets from creditors.
There are different kinds of trusts to fit all kinds of situations. Even if you have once set up a revocable trust, this may not continue to be the best trust for you. Or perhaps you need to amend it for greater protection to address the changes in the law or quantity or type of assets over the years.
Contact us to learn more about how we can help you and your family obtain peace of mind knowing that you have a long-term succession plan and protection of assets in event the unexpected happens.