4 Asset Protection Strategies For Wealth Retention
If you’re known for your deep pockets, you’ve got a much higher chance of a lawsuit being filed against you at some point in your lifetime. It doesn’t matter if you’ve come into some money on your own or were born into a wealthy family, you need to start thinking about protecting yourself and your assets. While you should work with a finance lawyer to achieve the best, and most thorough, asset protection, we’re giving you five strategies to start thinking about on your own time.
The best asset protection is keeping your assets separate
You’ve heard this before: trust is the cornerstone of any healthy relationship. While we believe you should trust your spouse, it may be a good idea to keep your assets separate from his/hers, especially if they have children from a previous marriage. If, God forbid, something negative were to happen to you, your spouse automatically has quite a lot of power over your finances, and YOUR children may end up with a smaller inheritance than you planned. As bad as this sounds already, the problem only compounds if one of you files for divorce. This is also true for joint accounts with any other family members, such as children or parents, and even business partners.
Up your liability insurance
Your personal umbrella liability coverage should be at least equal to your new net-worth. If this isn’t the case call your broker to increase this right away. In case of litigation, you want to be covered completely so you can still come out of your troubles with as little damage as possible.
Safeguard yourself from your renters
Got rental property that’s occupied with tenants? It’s a good idea to create a business entity for your property, such as an LLC or corporation. If you do ever face litigation from a renter, they can only attack the assets held within the entity, while you stay safe on the outside. This works for small businesses as well.
Don’t settle for “informal partnerships”
Business partners make it a lot easier to get your project off the ground. More money, more time, that whole “two heads is better than one” line you’ve heard your whole life - all these things sound great, right? Unfortunately, now you’re on the hook for your partner’s actions as well. If he/she is in an accident or suffers litigation, your assets are now automatically in jeopardy. It’s a good idea to avoid business partnerships whenever possible and to get thorough asset protection if it's not.
The bad news - your financial status makes you a target for litigation. The good news - with some simple strategies and the help of a reputable financial planner, you can be a lot harder to hit. Asset protection should be a big priority in your life.