Asset protection planning takes many forms for every type of individual, and isn’t always associated with multimillion-dollar offshore trusts. Whether you’re concerned about bankruptcy, creditor, divorce, or an injury case, you should start by building a foundation of protection.
Here are 4 fundamental principles you may want to consider for yourself:
- The more protection you want, the more control you may need to relinquish. First, ask yourself two questions: Is there any chance that I may want this asset back on a rainy day? Am I willing to relinquish complete and total control over it? The more strings you attach to an asset you are giving away, the more likely it is that a creditor will be able to use those strings to obtain access to the asset.
- Timing is everything. The time to plan for asset protection is when no creditors are looming on the horizon. Although you may plan to protect assets from unforeseeable future creditors, strict rules, called “fraudulent conveyance laws,” protect the rights of present and foreseeable future creditors. The courts help shape the definition of such creditors on a case-by-case basis, and each state’s statutory time frame varies.
- The method of transfer matters. Do you simply want to give the asset away, or are you considering a more advanced strategy, such as an asset protection trust? More complex strategies may come with additional administrative rules, as well as ongoing costs.
- Federal and State laws can be tricky. The implications of federal and state laws on asset protection can be complex and depend on many factors, including the determination of exempt and nonexempt assets, who the creditor is, and the basis for the claim. On top of that, state-to-state variations in how federal and state laws overlay can complicate matters even further.
My name is Valerie Leonard and I have experience helping clients build a foundation for asset protection planning that includes determining the level of protection you need, insurance, estate planning, and advance transfer strategies. Together with your experienced attorney, I can help you develop a good asset protection game plan – one that you can understand, feel comfortable with, and incorporate into your total financial picture. Contact me for more information.