Those who have substantial assets are often the targets of lawsuits. It is therefore vital that high net worth individuals and families practice asset protection strategies. A recent article discusses several of these strategies:
- Increase Your Liability Insurance: Liability insurance is often an individual’s first line of defense against litigation. Check with your insurance broker periodically to ensure that you have the correct amount and types of coverage.
- Consider Separate Assets: Imagine that you receive a windfall inheritance. In many states, if you deposit the money in a separate account, it remains 100% yours. However, if you put the money in a joint account, half of it instantly belongs to your spouse. It is strongly recommended that you consult with your advisor as to state law, separating assets may also have the counter effect of destroying asset protection for marital assets.
- Protect Yourself From Renters: If you own any rental property, it is vital to shield your personal assets against the claims of a disgruntled tenant. Consider creating an LLC or corporation to hold the rental property, with a trust to own the LLC or corporate interests.
- Review all Joint Accounts: Money in a joint account may be at risk because it is subject to the risks associated with the other people on the account. Periodically review all joint accounts to ensure that it is still a wise decision. When reviewing these accounts, remember that divorce, a tax lien, or a lawsuit judgment may wipe out the entire account.