Shielding Your Assets

  • To properly shield your assets requires planning and restructuring as to the way you hold and control those assets.  Asset protection planning is the method of preparing for the possibility of future lawsuits by rearranging the ownership of assets so that they are beyond the reach of potential creditors.

    Taking action to protect your assets must take place before any event has occurred that could result in a claim against you.  If you have already committed an act that could result in a claim, or if you have been sued, then it is too late. Any asset transfers at that time (without adequate consideration) may be considered a fraud upon creditors; in which case, the law would not respect the transfers.

    We can help you retain your assets through the proper planning, knowledge, and the coordination of documents and agreements, helping you keep more of your own money and more for your loved ones.  Asset protection planning should be integrated into your tax and estate planning.

    Some of the big asset protection areas are:

    • Avoiding probate, minimize estate tax
    • Ensure that your finances are managed if you become incapacitated
    • Shield your assets from potential creditors
    • Control who inherits your property
    • Avoid losing your assets to a nursing home
    • Protect your assets from lawsuits
    • Prevent being a victim of fraud, identity theft, or scams
    • Safeguard your home & personal property
    • Protect your assets in love and marriage
    • Avoid legal traps of jointly owned property

    How can you protect your real estate holdings?

    Too many people make the mistake of buying rental property in their own name. This can have some serious implications for you in that your real estate holdings can be discovered rather quickly, since they are filed as public records.

    This can help be tempting to someone who is trying to decide if they should take the trouble to sue you or not. If a tenant in your rental property sues you, or anyone else, they can legally go after, not only that property, but any of your other assets held in your personal name.

    Limited liability companies and family limited partnerships offer some protection from creditors.  It is much more difficult for creditors to reach business or investment assets that have been transferred to these limited liability entities.  If a creditor was able to reach these assets your liability would be limited to the assets in that LLC.

    Conversely, an LLC with valuable assets could protect you from creditors coming after you personally (say, over a car accident you caused). The creditors could seize distributions from the LLC, but if the manager of the LLC doesn’t make any distributions, the creditors are out of luck.

    You should also restrict how many properties each of your LLCs owns, as anything owned by that LLC is vulnerable if the LLC is sued. If you are the only shareholder, a creditor could claim that the company is your alter ego and thus puncture the shield it provides

    How can you protect your business assets?

    See our information on Protecting Your Business

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