When you’ve worked your entire life to build your wealth and create financial opportunities, it’s only natural to want to protect what’s yours. That’s where asset protection planning comes into play.
From a practical standpoint, what is asset protection, and who should be prepared for it? What steps or tools may go into creating an asset protection plan, and who can you turn to for further assistance? Let’s explore this important concept in a bit more depth.
What Is Asset Protection Planning?
Put simply, asset protection planning is all about organizing your assets and affairs in advance, in order to shield your most important assets from any potential risks down the line. Most commonly, asset protection planning is done to safeguard valued assets from creditors and lawsuits. The concept can be applied to many different types of assets, including real property, business interests, stocks and bonds, jewelry and art, and so on.
Many people often think of asset planning in conjunction with estate planning. Though they are certainly not one in the same, these twin goals may use similar vehicles (such as trusts, for instance), and have the ultimate aim of protecting your chosen assets. These concepts can also be integrated. Estate planning is about lessening or avoiding taxes at the time of your death, helping important assets avoid probate, and ensuring the smooth transition of accounts and property to your survivors. Asset protection planning is about looking at how to shield valued assets during your lifetime.
An asset protection plan may involve a number of different strategies or protection vehicles, ranging from establishing joint ownership of an asset, to researching state and federal exemption planning, to procuring insurance coverage, creating one or more trusts, or establishing a limited partnership.
Bear in mind that asset protection planning is about taking steps to protect certain assets. It is not about evading taxes, hiding assets, or attempting to defraud creditors. Having protections and safeguards in place is intended to secure your assets, not hide them and cheat your creditors.
Who Should Consider Asset Protection Planning?
While many people tend to think of asset protection solely as the purview of extremely high net worth individuals, the reality is that it’s an important concept to consider and understand, for any person or household with valuable assets.
There are many different mechanisms, approaches, and strategies that can form the backbone of an asset protection plan, and it’s important to prepare well in advance, in order to mitigate the effects of a potentially complicated or unwelcome situation down the line. A sound asset protection plan can make a difference in the face of any number of events, including divorce, lawsuits, judgments, or claims from creditors.
One important thing to remember? Asset protection planning is intended to be proactive, rather than reactive. In other words, in order to develop and implement an effective asset protection plan, it’s key to begin the process before you face a judgment, a lawsuit, or a claim. Attempting to protect one’s assets after creditors have started to seek a remedy could have serious negative implications, and may even open you up to civil or criminal action.
There are many moving parts and pieces associated with asset protection planning, and developing a strategy may involve working with any number of experienced professionals, including insurance agents, financial planners or wealth managers, and your trusted attorney. An experienced attorney can help offer guidance and insights on many important matters, including setting up trusts and creating an estate plan.
Want to Keep the Conversation Going?
Curious about asset protection, estate planning, or any other aspect of real estate or bankruptcy law in Chicagoland? Want to talk about all the ways that your decisions now can significantly affect your long-term financial goals in the future – including tax liabilities, getting access to cash when you need it, simplifying estate transitions, and more? Don’t hesitate to get in touch with the attorneys and staff of the Gunderson Law Firm to keep the discussion going.
The Gunderson Law Firm possesses the expertise and insight necessary to help you find effective solutions tailored to your unique needs – all reinforced by years of experience and long-term connections throughout Chicago’s real estate, title, finance, and insurance industries. Drop us a line to learn more or to schedule your free initial consultation.