There are some financial terms people are conditioned to relegate to the ultra-rich. Net worth. Wealth management.
Asset protection.
In reality, anyone with an income, home, or savings–regardless of value–should give these concepts careful consideration. Keep reading as we explore the various reasons that everyone needs an asset protection plan, not just the wealthy.
Estate Planning and Preservation
Whether you are a multi-millionaire or humbly middle class, your financial legacy is something sacred. It represents a lifetime of hard work. It is the result of vision and sacrifice.
Most importantly, it can serve as a lasting gift to posterity. It is every progenitor’s wish that their descendants have a better quality of life than they had. That doesn’t change based on the number of zeroes following your net worth.
Therefore, no matter your station in life, contact an asset protection attorney to get started on an estate plan. It is the best gift you will ever give yourself and your loved ones.
Everyone Is Vulnerable
There is a common misconception that only the wealthy are at risk of losing everything. This could not be further from the truth.
Accidents happen. Lightning doesn’t care whether you are a millionaire or living paycheck to paycheck. Nor does the person running the red light while engrossed on their cellphone.
But the pain is real for everyone. Regardless of your financial background.
Nothing Is Minor
Things have a way of escalating.
That small credit card purchase can quickly swell to a debilitating shadow over your financial life when you are between jobs and collectors come knocking. The minor disagreement with your neighbor over whose responsibility it is to trim the dead tree dividing your properties takes a troubling twist when the wind knocks it over and you are served notice.
Nobody is completely risk free. It is better to preempt these types of financial setbacks than to try and scramble after the fact.
New and Emerging Threats
Our world is changing at breakneck speed.
For the most part, it is changing in a good way.
However, with innovation comes new risks. Data breaches and cybercrimes. Frightening AI capabilities. Algorithmic discrimination.
As the world evolves and technology advances, it is crucial to update your financial protection plan to align with the times.
Best Tools for Asset Protection
Now that you know more about the importance of asset protection, let’s take a look at some of the best tools for securing your financial legacy:
- Insurance – arguably the most well-known form of financial protection, insurance protects your assets against acute risks. Be sure to have adequate coverage on all property. Take detailed photos and videos of all chattels. Get special coverage on antiques, artwork, and other rare collectibles. What about life insurance? Yes, it’s an absolute necessity for anyone with large earning potential and/or those serving as breadwinners. Just be careful that you understand the coverage you’re getting into. Many insurance salespeople will try to spin life insurance as savings vessels or “risk-free” indexed investments. Generally speaking, you are better off using life insurance for its death benefit and saving/investing through traditional banks and brokerages.
- Trusts – everyone has heard of the “trust fund” baby. It often carries connotations of the entitled rich kid. However, trusts are a crucial–and fully accessible–to people from all walks of life. By creating a separate legal entity for assets, they become out of reach of creditors and collectors in the event of personal debt or court judgments. See if you can set up a domestic asset protection trust in your state. This is a special kind of trust in which the grantor (person creating the trust) can get some beneficial interest in assets already contributed to the irrevocable trust. This creates a “best of both worlds” scenario and can be especially beneficial for people owning and operating LLCs.
- Business structure – the legal formation of your personal business is a crucial component of asset protection. Sole proprietorships and standard partnerships are extremely vulnerable to creditors and liability. Any debt or malfeasance of the business can leave personal assets exposed. Many modern small business owners form LLCs. This insulates personal assets from those of the company. It is also worthwhile to explore limited partnerships (LPs). They are a great tool for family businesses. Limited partners can invest in the business without sharing in the financial and legal risk of the enterprise (beyond their own financial stake). Partners can also make gifts to the LP, helping lower taxable estates.
Other important components of asset protection include wills, succession plans, premarital agreements, and other legal documents that offer guidance on how to distribute your estate.
Take Nothing for Granted When It Comes to Asset Protection
Fallaciously associated with the ultra-rich, asset protection is a key component of financial health for people from all walks of life. If you are looking for additional ways to fortify your financial legacy, contact Skabelund Ultimate Asset Protection for a consultation today!
