Asset protection planning is a critical and often overlooked aspect of estate and business planning. The goal of most of us is to work hard, save money and accumulate assets so we can provide for our families and have a comfortable retirement.
Unfortunately, in our litigious society these hard-earned assets can be quickly lost due to one act of liability that leads to a large legal judgment. This liability can arise from something as common as an automobile accident or a personal guaranty on a business line of credit or lease.
Revocable trusts, wills or other standard estate planning documents will not protect assets from lawsuits. Additional planning is required to help insure that you will still own your assets through your retirement years and beyond. There is a misconception that such planning is only for the wealthy. But ordinary, hard-working, middle-class people are often more vulnerable than the wealthy since it is often more difficult for them to replace the lost assets.
Candidates for asset protection planning include:
- persons in high risk occupations such as physicians, dentists, lawyers, accountants and real estate developers
- business owners and entrepreneurs
- owners of rental properties
- anyone who has just sold a business
- homeowners with more than $150,000 in equity in their home
- persons who allow teenage children to drive their cars
- persons with substantial bank or investment accounts that they can’t afford to lose.
If any of these situations apply to you, you should consider incorporating asset protection techniques in your planning.