CandleFocus

Asset Protection

Candlefocus Editor
Asset protection is a concept that involves shielding one’s assets and possessions from seizure, taxation, and other forms of loss. There are a variety of ways to accomplish asset protection, the primary ones being through legal means that adhere to the law. Evasive actions like concealing assets, bankruptcy fraud, contempt, and fraudulent transfers are considered illegal and are not part of the asset protection arena.

Fortunately, there are various solutions available to individuals seeking asset protection. They range from fundamental solutions like leasing or insurance coverage to sophisticated mechanisms like creating trusts, limited liability companies, bank accounts in other countries, or other vehicles of reducing asset exposure. Depending on one’s needs and priorities, a comprehensive plan can be created to safeguard assets properly.

In regards to legal protection, tenants by entirety is often cited as a major form of asset protection. This arrangement is available to married couples in certain jurisdictions allowing them to jointly own a property with equal title as a single entity. The main benefit is that if one partner is sued, the other partner’s half of the property is predominantly safe from the lawsuit.

In addition to tenants by entirety, placing property or assets into a trust can help protect it from creditors and lawsuits. A trust can act as a steward for a person chosen to manage the specified property and assets – granting immunity from creditors and anyone else attempting to access the contents of the trust. Since the individual has relinquished control and ownership of the trust’s assets, a trust is a very viable solution for asset protection.

However, clients must keep in mind that laws vary from state to state and it’s best to work with an attorney when creating an asset protection strategy. The attorney should be knowledgeable of the state laws, the applicable exemptions that exist, and what assets are susceptible to attack. He or she may also be able to suggest other plans that can better protect the assets while also helping the client reduce their overall exposure.

Generally, any participating entity in asset protection must also comply with reporting requirements set by the federal government in order to remain legal and protect the assets. When done properly, asset protection allows individuals to become more secure in their financial future and operate with peace of mind.

Glossary Index