Six Things You Can Do Right Now to Protect Your Assets
Asset protection should be a top priority for anyone with considerable assets, but unfortunately, many people put it off until it is too late. Many people don’t realize that there are steps they can take today to protect themselves. If you are reluctant to contact an asset protection attorney, we review some of the things you can do to assess the vulnerability of your estate.
1. Identify Your Risks and Manage Them
Before you do anything, the first thing you should do is identify all potential sources of risk and then consider what you can do to protect yourself and your family. For example:
- Married couples should identify which assets are individually owned and which assets are jointly owned. Assets that are jointly owned can be attached by creditors of either spouse. As a result, you should consider seeking professional guidance as to whether any jointly owned assets can and should be transferred to the sole ownership of one spouse.
- If you own or are considering starting a business, you need to consider whether you can be held personally liable for business obligations and liabilities. Established business owners should periodically review their business structure and dealings to make sure they haven’t unwittingly made themselves personally liable for liabilities arising from their businesses.
- Identify areas of your life that carry specific, unique risks. For example, owning a vacation home with a pool can present additional risks, especially if you rent it out or allow other people to use it.
Asset protection does not always involve sophisticated legal solutions. There are often practical steps that you can take to protect yourself, but the first step is identifying your risks. That said, an experienced asset protection attorney can help you identify any risks that you have overlooked or simply make sure that you haven’t missed anything.
2. Review Your Insurance Coverage
The next thing you can do is review what insurance you have in place and consider whether the amount of coverage is appropriate. You may have purchased particular policies when you have less income or fewer assets – coverage that would be inadequate for your current station in life. Some of the insurance coverage questions you should consider include the following:
- Do you have insurance coverage in place that will provide adequate income in the event that you become disabled and unable to work?
- Do you have adequate premises liability insurance in the event that someone is injured on your property?
- Do you have or need insurance that covers assets of unique value such as artwork, jewelry, or exotic cars?
- Do you have professional or business liability insurance that will provide adequate protection?
- Do you have adequate car insurance that will provide substantial coverage in the event that someone else is injured in a car accident with you?
Insurance serves a critical role in protecting your assets – it prevents you from having to liquidate important assets to pay any claims that may arise. An asset protection attorney can review your existing coverage and discuss with you whether it is adequate, as well as suggest any additional coverage you may want to consider.
3. Understand Florida’s Homestead Exemption
One of the reasons why Florida is so attractive to wealthy people is its generous homestead exemption, which allows residents to protect their primary residence from claimants with no limit on value. In other words, Florida’s homestead exemption allows you to protect your home – arguably, your most valuable asset – from seizure from creditors. In order to qualify, you must meet the following criteria:
- You intend for the property to be your permanent and primary residence;
- The home is on a lot that is less than a half acre if located within a municipality or less than 120 acres if located outside of a municipality; and
- You own the property in your name or as the beneficiary of a revocable trust.
For those who split their time between Florida and other parts of the country, you may want to consider establishing Florida as your permanent residence. An asset protection attorney can walk you through the steps you will need to take to make sure your home is protected from creditors by operation of Florida’s homestead exemption.
4. Form the Right Business Entity
For those people who own their own business or are in a partnership, you need to take steps to insulate yourself from current or potential business liabilities. Sole proprietors and members of a partnership can be held liable for the debts and other obligations of their business. If your business fails, the financial impact on your family could be disastrous.
There are many different types of business entities that serve as a liability shield for their owners. LLCs are a popular choice – they are easy and inexpensive to create yet offer a tremendous amount of protection. An asset protection attorney can discuss with you whether an LLC makes sense for you or whether some other structure may be a better fit.
5. Consider Financial Products
There are a variety of financial products that can be purchased that provide some asset protection. The two most common financial products that people purchase are
- Cash value life insurance
Both of these can be a way to protect cash from attachment by creditors and other claimants. However, once these products are liquidated, you should take steps to keep them separate from other assets and not commingle them with other assets. An asset protection attorney can help you choose the products that are right for you and whatever steps you need to take to ensure you are protected.
6. Review Your Estate Plan
Asset protection should be one of the chief priorities of your estate plan. Failing to update your estate plan, however, means that certain assets may be exposed. At a minimum, you should meet with your estate planning team after any major life change, but it is best if you review your estate plan at least every couple of years to make sure it is providing the protection you need.
Contact an Asset Protection Attorney Today
Of course, the best thing you can do is seek the assistance of an experienced asset protection attorney. At Ellis Law Group, our team has extensive experience in both estate planning and protecting our client’s most valuable assets. To discuss your needs and how we can help, contact us today at 561-910-7500 to schedule an appointment.