While many people write off asset protection as a mechanism for the very wealthy, the reality is that it would be worthwhile for middle class people with a nice home and a couple of cars to consider as well. Engaging in asset protection is even more worthwhile for people who can see themselves being sued one day, such as lawyers and doctors. A new article in The New York Times discusses how to protect your assets in the event of a future lawsuit.
The article begins with the caveat that it is virtually impossible to shield all of a person’s assets. Rather, asset protection involves taking steps to discourage creditors from going after certain assets. As Jason Cain of Credit Sussie Private Banking USA explains, “there is no such thing as asset protection… What there is is good business and estate planning that as a byproduct insulates your assets from future, potential creditors.”
Several tips for protecting your assets from potential lawsuits include:
- Assess what assets you own, and the respective likelihood of a creditor pursuing them.
- Remember that insurance is the most crucial part of an asset protection plan. Consider the many different types of insurance, from automobile and homeowners insurance, to an umbrella policy to limit liability to arising from the unexpected, to professional insurance.
- Check current state law to see what assets are automatically protected.
- Consider holding money meant for transfer to heirs in an irrevocable trust.