Top Five Asset Protection Strategies

Everyone is rich. Most college graduates earn almost $3 million over the course of their working lives. Obtaining money isn’t that difficult in most cases. But holding onto that money is a different matter. Most people spend almost as much as they earn on housing and other basic living expenses. They usually splurge a little as well. But regardless of the amount of spending and splurging, something is almost always left over.

A St. Petersburg estate planning lawyer makes comprehensive estate plans for people just like you. These estate plans include testamentary documents, like wills, and asset protection instruments, like the ones discussed below. Asset protection in Florida gives individuals something tangible to pass to their children and grandchildren. So, in addition to a financial value, these assets have an emotional value as well, for givers and recipients alike.

Corporations, LLCs, and Other Legal Entities

Limited Liability Companies (LLCs) and corporations may be the most common asset protection devices. These entities legally separate individuals from their assets. So, if the business is sued, for whatever reason, personal assets are off limits.

For example, real estate investors often hold each property in a separate LLC to isolate liability. It’s crucial to maintain the entity properly, with separate bank accounts, accurate records, and adherence to legal formalities to avoid “piercing the corporate veil.”

Domestic and Offshore Trusts

Trusts can be powerful tools for protecting assets from creditors and lawsuits. A Domestic Asset Protection Trust (DAPT) allows you to place assets into a trust that protects them from claims while still allowing you to benefit from them. Some states, like Nevada and Delaware, have very favorable DAPT laws. These entities are only available on a limited basis in Florida.

For greater privacy and protection, offshore trusts in places like the Cook Islands or Nevis can provide even stronger barriers against creditors. These trusts place assets under the control of a foreign trustee, making it difficult for U.S. courts to access them.

Homestead Exemption and Other Strategies

Many states offer a homestead exemption, which protects a certain amount of home equity from creditors. Florida law includes an unlimited homestead protection, making a primary residence perhaps the most effective, and most trouble-free, asset protection tool.

A St. Petersburg asset protection lawyer can do more than that. Joint ownership strategies like Tenancy by the Entirety (TBE) shield property from individual creditors. Under TBE, a creditor of just one spouse cannot force the sale of the jointly-owned property.

Insurance Coverage

While not a legal shield, insurance is often the first line of defense. In the event of a natural disaster or other claimable event, the insurance company, not an asset, bears the financial loss.

Umbrella liability insurance provides coverage beyond the limits of your home and auto policies, typically in the range of $1 million or more. For professionals, malpractice or professional liability insurance is crucial. The goal is to have enough insurance to settle claims without putting personal or business assets at risk.

Retirement Accounts and Exempt Assets

Certain accounts and assets are protected by federal or state law. For example, ERISA-qualified retirement accounts (like 401(k)s) are typically safe from creditors, even in bankruptcy. Many states also offer protections for IRAs, life insurance cash values, and annuities.

By contributing to these accounts, you not only save for the future but also shield that portion of your wealth from most lawsuits.

Connect With a Hard-Working Manatee County Lawyer

A good asset protection plan has financial and emotional benefits. For a confidential consultation with an experienced estate planning lawyer in Lakewood Ranch, contact Drude Tomori Law. We routinely handle matters throughout the Sunshine State.

Source:

pmc.ncbi.nlm.nih.gov/articles/PMC4534330/