Owning big-ticket assets definitely makes you wealthy but there is also stress related to managing them. With a growing number of litigations around, there is always a risk of getting trapped and losing your assets to creditors and lawsuits.
Corporate executives, doctors, and people in litigation-prone professions are, particularly at high risk. So it makes sense to have a strategy for protecting everything you own.
Fortunately, you can do it lawfully and get peace of mind about their security. Here are the best strategies that you can implement for protecting your assets.
#1 Avoid a fraudulent transfer
An honest approach is perhaps the best way to be safe from litigation of any sort.
Make it a rule to never indulge in fraudulent transfers with the intention of defrauding your creditors. Any such action that involves the transfer of a property which is intended to defraud creditors can lead to criminal penalties.
There are chances of truth coming out sooner or later and you will end up losing the property and your reputation as well.
#2 Strip out your equity
Another smart option for safeguarding your assets is by pulling the equity out of them. The cash so stripped is to put into assets that are protected by the state.
For example, you can take a loan against your apartment’s equity and place these funds elsewhere. This is supposed to be a protected asset, something that is sheltered from judgments in the state where you live.
Obviously, the creditors will not be able to touch your alternative “asset” in this case.
#3 Establish an asset protection trust
Asset protection trusts are a reliable protection measure. Essentially, it involves a transfer of a portion of the assets into a trust which is run by an independent trustee.
You can go through https://silvertaxgroup.com/offshore-asset-protection/ to know more about how offshore trusts work. The assets which are a part of the trust are out of the reach of your creditors. Further, trusts not only protect your wealth but build it as well.
#4 Avoid mixing personal and business assets
An important tip for business owners who want to protect their personal assets is to keep the personal and business property separate. Mixing them up is a mistake that people often make and end up getting in deep trouble.
If you mix them up, there is a risk of losing the personal ones when the company gets into trouble. The risk runs vice versa as well.
#5 Utilize gifting
If you are looking for a simple yet sure alternative for asset protection, gifting them to your children or other family members is a smart move. You can gift to a trust as well.
With this method, you effectively transfer the property out of your name. Now, it is in the names of your family members, which protects it from creditors even if they sue you over a liability.
While following these asset management tips can protect you to a significant extent, you should still have a team of financial and legal advisors to keep things sorted out. While financial professionals can create a solid protection plan, the attorneys can actually put things into action.
