Asset Protection Is Not Just For The 1%er’s: Who Really Needs Asset Protection And Planning
People sometimes have the misconception that asset protection and planning is something only billionaires with vast offshore bank accounts or homes full of priceless artwork need. That could not be further from the truth. There is no “wealth threshold” for how much you need to earn or be worth in order to reap the benefits of successful asset protection. It’s not what you earn that matters, it’s what you keep. This common wisdom is usually applied to the impact taxes can have on income and investments. Other potential liabilities, however, including lawsuits, divorce settlements and creditor claims, can be just as harmful to personal wealth as taxes, if not more so.
Especially in light of the difficult current economic times, you should be concerned about the protection and preservation of your assets. In this economy, the threat of creditors taking your assets is real and frightening and transcends all levels of personal wealth, from the very rich to the just-starting-out.
You need asset protection and planning if:
- you are a married couple;
- you are a parent with teenagers, or children approaching marriage;
- you have inheritance protection concerns;
- you are in a profession with a high degree of liability (doctor, lawyer, financial advisor, landlord, real estate developer, real estate investor);
- you face a potential tax or other government liability;
- you have accumulated, or are about to receive, significant wealth (e.g., inheritance, investment or business success);
- the value of your home has been reduced to less than the amount of your mortgage;
- you own residential or commercial rental property;
- you own your own business that has W-2 employees, creditors or suppliers.
A comprehensive and stable asset protection plan is crucial for many different people, for many reasons, all united together with the common goal: keeping their assets for themselves and their families, and not exposed to greedy creditors, aggressive litigants and others seeking to deprive people of their hard-earned assets. Make no mistake – bad things happen to good people all the time. You don’t have to be irresponsible or negligent to get sued.
Strategies to preserve wealth must be in place before that wealth is under attack by a creditor or plaintiff. Also, an asset protection plan is only effective if it reflects an individual’s or family’s current circumstances. The plan must constantly evolve — as new assets are added and others are divested, as new debt is assumed and other obligations settled, or as new business ventures are embarked upon or personal situations change.
Clearly, all types of people need asset protection, from professionals who have worked hard to build their practices, to small business owners who service local, regional or national clientele, to captains of industry who face personal liability for their business affairs, to ordinary people facing financial hardship.
Due to the myriad risks and the complexity of the solutions involved in navigating the waters of proper, effective, asset protection and planning, you should not go it alone—seeking the assistance of competent legal counsel is vital.
— By Doug M. Hanchar, Esq., Barnes Law
Doug M. Hanchar is an associate attorney with Barnes Law, licensed to practice law in California.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.