You have worked hard to get where you are right now so it is only right that you protect the fruits of your labor. The thing is you never know what lies ahead. There are many underlying factors that will put you at risk of losing your hard-earned investments and possessions one day.
Can you imagine losing everything you have worked hard for in just a snap? You can easily lose them through a lawsuit, bankruptcy, or credit collectors may take it all away one day. It sounds horrifying, but it can happen anytime if you do not protect your assets early on. Learn more about how you can protect your assets by reading our expert-recommended tips below.
Set Up a Business Entity
If you are a business owner, it would be wiser to choose the right business entity for your company instead of running as a sole proprietorship or a general partnership. For instance, sole proprietorship easily exposes your personal assets including your home and bank account to claim against your business.
It may be wise if you set up an S corporation or a limited liability company so you can keep your personal assets protected should you encounter the worst-case scenario. Of course, each business entity has its own set of pros and cons so you still have to weigh in your priorities when making the final decision.
Estate Planning
Another option would be estate planning. When it comes to estate planning, you will be preparing the transfer of your assets to your respective heirs after your death. Aside from the preparation of designating your assets, as Thorburn Wealth Management financial advisor emphasizes that estate planning is more than just splitting your assets.
This also includes reducing tax obligations for your heir in the process of transferring your assets so you can distribute your wealth as much as you can. Aside from the distribution of your asset, estate planning could also involve selecting who your heir’s guardian should be in the untimely event of your death.
Asset Protection Trust
One way of protecting your asset is by getting an irrevocable trust. Asset protection trust, in particular, protects your assets from creditors, lawsuits, or collection agencies. If you opt for this, you have two choices of asset protection trust: domestic asset protection trust and foreign asset protection trust.
Domestic asset protection trust is only established within the US while foreign asset protection trust or offshore trust’s jurisdiction covers outside of the US. Although it serves full protection of your assets, you also have to keep in mind that this is irrevocable so you need to make sure your decision is set in stone. Hence, it is best to seek expert consultation before you push through this process.
Invest in Insurance
Did you know that getting insurance is also one way of securing and protecting your assets? If you have a business, getting insurance specifically for your business is highly recommended. For personal assets, it is best to get umbrella insurance that will cover conditions outside of your current insurance policy.
Sure, you may already have an existing home or vehicle insurance, but it is best to review these existing insurances for any gaps and discrepancies. You might be surprised that there are gaps in your insurance policy that could lead to the seizure of your home and other properties.
Should you find yourself being asked to turn over your valuables in case of a lawsuit or anything else, umbrella insurance will provide you ample protection. Just like with any insurance, you first need to evaluate the inclusions and terms of the umbrella insurance policy you are getting.
Improve Business Operations and Internal Controls
For business owners, the best way to protect your asset is by adhering to proper procedures and ensuring you have sound internal controls. Without ensuring these good business practices, you may find yourself facing lawsuits that could put your business assets up at stake.
You can also safeguard your business by using the right contracts and double-checking agreements before signing them. Just like with any operations, precautionary measures should be practiced within your company to avoid getting into trouble. Remember, fraudulent activity can put your company at risk anytime.
There are more ways to protect your assets from creditors and lawsuits. It may seem like a time-consuming process, but being prepared early on can save you from losing your hard-earned valuables in the long run. Each option when it comes to protecting your assets has its own pros and cons so it is best to evaluate which strategy would suit your needs in the long run.
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