Long-term asset protection is a customized strategy that shields you and your business assets from litigation or creditors. An asset protection strategy also protects your loved ones and their inheritance in the event of your incapacitation. Find out why you should consider creating an asset protection strategy now and why altering that plan in the near future may not be the best decision.
- Asset protection can protect your business from lawsuits or creditors.
- An asset protection strategy can also help your heir skip probate.
- Asset protection strategies can also prevent business losses from affecting your personal wealth.
- Asset planning can provide you with tax benefits, including reducing your estate’s value.
- An irrevocable trust doesn’t allow adjustments, whereas a revocable trust can be modified at any time.
- Waiting to create or making too many adjustments to your asset protection strategy can be costly.
Why Create an Asset Protection Plan Now?
Long-term asset protection is the process of creating a strategy to safeguard your assets from liabilities. Most investors or property owners can benefit from asset protection. There are many reasons to create an asset protection plan now, including the following:
Protect Your Business
Asset protection shields your business interests from legal liabilities, which could damage your reputation and, ultimately, your revenue. An asset protection plan can also help protect you and your business entities from malicious or illegitimate lawsuits. Additionally, the right asset protection plan may help you save on insurance. While sufficient insurance is still important in protecting your assets, an asset protection strategy can give you another layer of protection.
Asset protection is especially beneficial for dangerous business assets, which are physical assets like property or land. A dangerous asset is anything that is subject to expensive litigation or debt collection practices. An asset protection strategy can also help keep different business entities separate, which prevents one loss from affecting the success of another investment.
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Protect Your Family’s Assets
Protecting your heir is one of the most common reasons to create an asset protection strategy. Asset protection isn’t just for the wealthy. In fact, asset protection can help everyday families protect their assets. Lawsuits and tax liens may actually impact investors with less wealth more significantly, making asset protection just as important.
With asset protection and a last will and testament in place, you can ensure that your assets go where you want. Asset protection may also allow your family to skip the probate process upon death. This means less stress and frustration by preventing creditors or other family members from questioning the transfer.
Protect Your Personal Finances
Asset protection plans shield your business investments from your personal finances. This means it’s less likely that a creditor or plaintiff in a lawsuit is able to come after your personal wealth. Even if your business investment experiences losses or a lawsuit, it won’t cut into your personal retirement or savings accounts.
Provide You With Tax Benefits
Asset planning may also provide you with tax benefits that aren’t available with other investment strategies. Creating an asset protection strategy can help you qualify for more tax deductions, reducing your tax liability. An irrevocable trust, a type of asset protection, also doesn’t consider your assets personal property. This means the IRS won’t include them when calculating your estate’s value.
Irrevocable vs. Revocable Asset Protection
Two types of trusts are used in asset protection: revocable and irrevocable. A revocable trust includes stipulations that you can modify at any time. An irrevocable trust cannot be modified unless all beneficiaries agree to the changes. Both types of trusts have pros and cons, and understanding them can help you choose the right one for your estate.
The biggest advantage of an irrevocable trust is that creditors aren’t able to claim assets in one, which shields you and your family members from unpaid debt. Some of the best reasons to create an irrevocable trust include the following:
- When you want to minimize estate taxes.
- When you want to take advantage of government benefits.
- When you want to protect your assets from creditors or lawsuits.
- When you want to protect your loved ones from creditors or lawsuits following your death.
Irrevocable trusts are designed to be unchangeable but offer the best asset protection. It’s crucial that you work with an experienced estate planner who can set up your strategy in a way that best protects you from legal liabilities and taxes and makes the process of transferring assets to heirs as simple and convenient as possible.
A comprehensive, customized asset protection strategy is the best option. This ensures that you choose the right trust type and that it offers the most useful benefits to your assets.
Why Altering Your Asset Protection Plan Could Be a Mistake
Waiting to create or making unnecessary changes to an asset protection plan can be a costly mistake. Your financial assets are vulnerable and exposed to lawsuits, liens, high taxes, and even competitors. Many investors don’t realize that their assets are even more exposed after death. You spend your life collecting assets and building wealth to put your family in a better financial situation, making asset protection extremely important. Without an asset protection plan in place, others may try to stake claim to your acquired assets.
Altering your asset protection plan can lead to doubt among beneficiaries and creditors, who may try to come after your wealth or file frivolous lawsuits. If you want to make adjustments to your after-life plan, you can always edit your living trust or will. However, neither a living trust nor a will is enough to protect your assets fully.
Do you need help assessing the risk of your assets and creating an asset protection strategy that shields you and your family? Are you ready to create a long-term asset protection strategy that aligns with your goals, so you can limit adjustments?
Protect your investments and property from expensive lawsuits and creditors, and schedule your wealth planning blueprint call today. Whether you’re planning to acquire assets in the near future or you already have exposed assets, an asset protection strategy can help you protect your investment.
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