What is Asset Protection?
Asset protection includes the concepts of and strategies for guarding one’s wealth. Asset protection is a type of planning intended to protect one’s assets from creditor claims. Individuals and business entities use asset protection techniques to limit creditors’ access to certain valuable assets, while operating within the bounds of debtor-creditor law.
Asset protection is one of the most unappreciated topics of estate planning. As a result, many people end up having their retirement account accounts, family homes, insurance policies and other valuable assets either lost or greatly diminished because they’ve failed to put an asset protection plan into place. In order to avoid these types of losses you need the counsel and guidance of an estate planning attorney to explain the legal requirements surrounding asset protection. The Law Office of Rodney Davis, LLC is here to help you make sure that your assets are legally protected. Just give us a call at (205) 578-1597 or click here to learn more about asset protection.
Why Do I Need Asset Protection?
While there are various reasons to consult with an estate planning attorney about an asset protection plan, there are two very common reasons why you should consider asset protection:
Reason #1: Lawsuits
This is one of the main reasons why individuals and businesses need asset protection. On many occasions, frivolous lawsuits are filed by one party knowing full well the other party would prefer to settle out of court rather than go through a lengthy and disruptive court proceeding. To counter, do asset protection planning and implement asset protection strategies.
Reason #2: Probate of Estates
Another reason for asset protection information is that it is difficult to transfer assets to your heirs without excessive loss due to probate and taxation. Not only is probate a lengthy process – it encourages family infighting – it can severely erode your families assets. Did you know that when Elvis Presley died all that was left of his 10 million dollar estate was 2 million dollars? This was definitely a case where no asset protection planning was taken to implement asset protection strategies.
Consider yet another example of how little or no asset protection planning can cause you to lose assets:
An engineer and a nurse lived together for years, but never got married. They decided to purchase a home together and put in the real estate documents that they were buying the home as tenants in common instead of as joint tenants with a right of survivorship. They did this thinking that if one of them died the other person would get the house. However, they were badly mistaken, and when the engineer died without leaving a will his interest in their home went to his sister (who did not get along very well with the nurse). In the end, the nurse was forced to leave the home. Had the engineer and nurse contacted an attorney to implement an effective asset protection plan, the nurse could have remained in her home.
Timing is Key
When you want to protect your assets from future claimants, the more proactive you are the better off you will be. If you believe you are about to be sued, it is likely to late to start the asset protection planning process. If you are in a profession that comes with significant liability, you have accumulated a lot of wealth, or your home is now worth more than the mortgage you have on it, it’s time to do some asset protection planning for your future. The point is, you have to plan to protect your assets before it is too late. It is never too early to implement a plan to keep your assets protected, but it can be too late once you are the subject of a lawsuit or in the event of a loved one’s death.
If you or someone you know is concerned about avoiding the above problems and issues, please contact our office at (205) 578-1597 for a consultation on asset protection planning.