Smith 
For almost 20 years, I’ve helped clients navigate financial uncertainties, and I’ve seen how worried they get about protecting their hard-earned assets. Market swings and stressful news can make them fear losing what they’ve built, which is why asset protection is so crucial for both their wealth and peace of mind.
Blake Harris, the Managing Attorney at Mile High Estate Planning, has shared his expertise on asset protection with us. Here are his insights on keeping your assets safe.
If you have assets, protecting them is a major concern. Various threats like lawsuits, creditors, and even divorce can put your property at risk. In our lawsuit-happy world, many people could try to take what’s yours. Thankfully, you’re not defenseless. There are legal ways to protect what you own, and it’s entirely lawful.
To do this, you’ll need an asset protection attorney who understands the relevant laws.
What Is Asset Protection?
Asset protection involves a range of legal strategies aimed at protecting your assets from creditors, legal judgments, and personal issues like divorce. It’s not a one-size-fits-all approach; the needed measures can vary greatly depending on individual circumstances. The goal is to take proactive steps to keep your assets safe, no matter what life throws at you.
Who Can Help?
Given the complexity of asset protection, expertise is essential. This isn’t something a layperson can handle. You need an estate planning attorney who understands the intersection of trust and estate law, family law, business entities, and sometimes even international law. A specialized attorney can make the difference between a secure financial future and a vulnerable one.
What Happens?
Asset protection planning generally leads to two key outcomes focused on safeguarding your wealth from potential legal threats. First, it helps secure your assets from legal actions, like lawsuits, by making your assets less accessible to the opposing party. This often involves moving assets into trusts or legal entities separate from your personal holdings.
Second, it allows for flexibility in meeting legitimate creditor claims, ensuring you don’t have to liquidate your entire wealth portfolio. This careful planning helps you meet valid financial obligations without exhaustive litigation or losing control over your assets.
When Do You Need It Most?
The best time to put an asset protection plan in place is before you actually need it. Laws against fraudulent conveyance prevent you from transferring assets to avoid a debt or judgment that’s already incurred. So, your plan needs to be in place beforehand.
Certain individuals, like doctors who may face malpractice lawsuits, can particularly benefit from asset protection. Similarly, spouses entering marriage with significant assets might find these strategies useful, as prenuptial agreements aren’t always foolproof. And if you might need nursing home care in the future, it’s wise to move assets into a trust to avoid them being used up for care costs.
What Are Different Types of Asset Protection?
Asset protection can include trusts, business entity formations, property ownership structures, and insurance policies.
Trusts:
Trusts create a legal separation between the grantor and the assets. They can be revocable, irrevocable, domestic, or offshore, and offer robust protection against creditors.
Limited Liability Companies (LLCs):
LLCs protect personal assets from business liabilities, making them valuable for business owners who want to separate personal and business risks.
Property Ownership Structures:
Jointly owning property as ‘tenants by the entirety’ with a spouse can protect it from claims against one spouse, although there are complications to consider in cases of divorce or death.
Insurance Policies:
Umbrella insurance policies can provide extra coverage beyond standard limits, serving as a financial buffer in lawsuits that exceed existing coverage.
Combining these strategies can offer comprehensive asset protection, tailored to your specific situation and risk.
What Are Different Types of Trusts You May Need?
Trusts vary widely to meet different needs:
Domestic Asset Protection Trusts (DAPTs):
These are set up under U.S. state laws and protect the trust creator’s assets against creditors. However, their effectiveness varies by state.
Offshore Trusts:
These are established under foreign laws and offer robust asset protection, making it difficult for U.S. creditors to seize the assets. However, they come with higher complexity and regulatory scrutiny.
What Is the Extent It Covers?
Asset protection isn’t about evading taxes or legitimate debts. Plans must comply with tax laws and ethical standards, ensuring transparency with the IRS and creditors to avoid legal issues.
How to Pick an Attorney
Choose an attorney who specializes in asset protection and has a strong track record. Look for someone knowledgeable in trust and estate law, family law, bankruptcy, and international law if considering offshore trusts. Interview potential attorneys, check references, and ensure they’ve successfully established similar structures before.
The Bottom Line
Asset protection can be costly and may reduce your control over assets. Weigh these costs against the potential losses from creditors or legal judgments. While a trust can protect your assets long-term, it requires careful planning and legal guidance to set up and maintain.
Being proactive and consulting with the right professionals can help secure your financial future.
