Making smart use of asset protection strategies is important at all phases of your wealth-building process. When you work hard, you deserve to benefit from the fruits of your labor and to enjoy financial security. You cannot do this if your wealth is lost due to things like creditor claims, lawsuits, high nursing home bills, irresponsible heirs, or estate tax. There are many different risks that could put your financial stability and legacy in jeopardy and you need to make plans to minimize and mitigate those risks.
A Connecticut asset protection lawyer at Nirenstein, Horowitz & Associates can assist you in developing smart asset protection strategies that make sense for you. The right approach to protecting assets is going to vary based on your wealth status, how you earn income, and the biggest threats to your financial security. We can provide personalized advice on which asset protection methods are right for you.
Five Key Asset Protection Strategies
While there are lots of different asset protection strategies to consider, five of the key ways that people protect assets include:
- Transferring assets into trusts. Trusts are a very powerful legal tool that can provide protection from many risks. You could use trusts to ensure you don’t have to spend down assets in case you need nursing home care; to prevent losses from irresponsible heirs; to reduce or avoid estate tax; and to shield your property from being lost due to mismanagement resulting from incapacity. Because you can create a trust and give the trust ownership over the property, the assets held within the trust are at far less risk than if you or your heirs or beneficiaries own the assets personally.
- Keeping assets in protected accounts. There are certain kinds of accounts given special protection, including in cases of bankruptcy. Examples include various types of IRA and retirement accounts. You could also invest in a primary home to take advantage of homestead exemptions.
- Buying a sufficient amount of insurance. You want to have enough insurance coverage to make certain an insurer will be the one picking up large bills. You should have health insurance in case you get sick, and you should make sure you have substantial liability insurance for auto and home in case you cause a car crash or someone gets hurt at your house. If you have a lot of assets, buying an umbrella policy could also be a good idea to get more coverage in case you’re sued for more than your standard insurer will pay.
- Incorporating a business. Incorporation means that your personal assets will not be in jeopardy because of a business bankruptcy, lawsuit against your business, or large debts incurred by your business. Your assets are very vulnerable if you run a company as a sole proprietor, or as a part of a partnership.
- Creating a power of attorney. You can create a power of attorney to make certain that your assets are not lost due to mismanagement in a time of incapacity. The power of attorney protects your assets by allowing you to select a trusted person who is competent at managing your wealth and who will immediately take charge if something happens to you. If you do not have a power of attorney, the court could appoint someone after a lengthy delay. The person who takes over may not be able to manage assets, and the delay could also result in lost value.
Some of these asset protection strategies may work better for certain people than others. Incorporating a business, for example, can help to protect the assets of business owners but is not an option for workers who earn standard wage income. Other strategies, like the use of trusts, can be a universal way to protect assets that can benefit almost everyone. Because your approach needs to be tailored to your own unique risk factors, it is important to talk with an asset protection lawyer about creating a personalized plan designed with your risk profile in mind.
Getting Help from A Connecticut Asset Protection Lawyer
A Connecticut asset protection lawyer can provide assistance in identifying whether these five key asset protection strategies will work for you, or whether there are other approaches that may be best given your specific situation. To find out more about how asset protection works and why it is so important to protect your wealth, join us for a free seminar. You can also give us a call at 860-548-1000 or contact us online to talk with an experienced attorney who can help you to ensure your wealth is used to provide you with financial security and to provide your loved ones with a legacy.
- Consider the Potential Impact of Alzheimer’s Disease - July 7, 2020
- Estate Planning: Bryant Tragedy Serves as a Stark Reminder - July 2, 2020
- Coronavirus Underscores the Importance of Planning - June 30, 2020