Estate planning is the best way to distribute your wealth to the right hands when you die or become incapacitated, but it’s practically useless is you can’t really protect what you own until that day comes.
That’s why asset protection planning is equally important. While it’s your moral obligation to take accountability for your liability, you can’t always trust the U.S. justice system to be just. In many ways, you might be sued unfairly only because you have a deep pocket other parties don’t mind to exploit. In the end, you can only rely on yourself to protect your best interests.
However, it’s never enough to use traditional asset protection tools. Their popularity doesn’t always mean they’re effective, and they even backfire more often than not.
Here are some of them:
Christensenyounglaw.com shares that any veteran asset protection attorney in Salt Lake City, Chicago, Albuquerque, or any U.S. city would tell that getting insured never covers you completely. Most policies have inadequate coverage and wide-ranging exclusions, leaving you with a thin layer of protection when faced with a judgment. Worse, you might not have any protection at all if your carrier becomes insolvent.
In addition, having liability insurance is a lure for the other party to pursue litigation because it’s perceived as easy money.
Use of Business Entity
Business entities, like a corporation, are a common way to create a line between business and personal assets and liabilities. This form of protection may shield your personal assets from a lawsuit filed against your company, your stock in the corporation may not be safeguarded if you get sued personally.
Your state may exempt specific assets of yours against the collection of your creditors, but they’re not without limitations. There may be a cap on your protected properties in terms of value and land area.
No one form of asset protection would ever suffice. If you really want to plan the right way, you should explore different tools that add layers of protection way before any hint of claim is one the horizon.