People today may seem to be lawsuit happy in this modern era. Whether you are a business or an individual, you must constantly be aware of the potential for a lawsuit to be filed against you for any number of reasons. There are some steps you can take to protect yourself and your assets from these unforeseen incidents.
There is no discrimination when it comes to the potential for a lawsuit. NO matter your age, race or religion, you can face a lawsuit if someone decides that you are doing something they do not approve of. One of the most vital things you need to know, is that these steps should be addressed as quickly as possible in order to acquire the highest degree of protection possible.
Follow These 5 Steps for Maximum Protection
Step 1: Asset Protection Trust
This happens to be one of the strongest tools you can have. If your assets are in the correct trust, those assets cannot be taken if you’re sued. This is especially important if you are in a business where you could be sued for malpractice.
Lawsuits are most common in these fields due to the nature of these professions and the potential for a substantial financial gain by the one bringing the lawsuit to court.
Umbrella insurance is available, but it is often insufficient to cover the expenses sought in a lawsuit. You should always assure that your coverage meets or exceeds your net worth.
Step 2: Separate Your Assets
It is vital to separate your personal and your business assets. If you have a business, or you are in a partnership with another party, you are both held liable should the business or partnership be sued. Therefore, your funds could be included and sought as well. There is a way to protect your assets and we will discuss this in the next sub category.
LLC or Corporation:
These two types of classifications are very similar, but there is one major difference. Both of these protect your personal assets from your business assets. So, should your company be sued, your personal assets cannot be touched. LLC’s add an extra advantage called charging order protection. In a nutshell, this advantage promotes someone who is suing to settle out of court or drop the lawsuit all together since they will likely never receive what they are seeking even if they should win the judgement in a lawsuit.
Step 3: Use Your Retirement Accounts
Individual Retirement Accounts or IRA’s are protected under federal law as long as they meet the qualifications necessary. In some states IRA’s are more protected due to the state laws. Moving cash into your IRA will protect it should you find yourself in a lawsuit. Do take care in recognizing that there are annual contribution limits with most IRA’s. It is a good idea to seek the advice and or assistance of an attorney to fully understand all of the complex rules in these types of accounts.
Step 4: Have a Homestead Exemption
Depending on which state you live in, the value of your home, or a lien on your home can be protected under what is called a homestead exemption. A few states offer unlimited protection, but not all states offer this full spectrum protection.
Also, keep in mind if you should file bankruptcy, then your home is no longer exempt. You can contribute more to your principal and mortgage payment as a way to protect your assets. Also, in this case you should keep in mind that if the home is titled to you and another person, and they are sued, then you as a co-owner have equal interest in the property. How the home is titled can have a major impact on a creditors’ ability to attempt to seize the property. It is important to know your specific state laws concerning this matter.
Step 5: Elimination of Your Assets
This step is fairly elementary. If you don’t have any assets it is extremely difficult for someone to take way something that you do not have. To perform this task, you can transfer ownership of your assets to an offshore protective trust. This type of trust can be easily accessed by you and your family but can’t be touched by someone seeking to seize your property or money. There is also the option for you to give what is known as an “advancement on your will”. This allows you to give your heirs assets early, prior to your actual death.
Summing Up What We Have Learned
Simply speaking, the more assets you have the more protection you will need. It does not matter if your assets are personal or business related, they are still a target should you be the victim of a lawsuit. There are personal situations that can arise such as divorce and foreclosure that can take your assets, as well as lawsuits with business partners.
Never assume that you won’t be the victim of a lawsuit. It happens to people from all walks of life. What is most important is to understand which actions you should take to protect you and your assets, as well as your future heirs from being victimized during lawsuit proceedings.
At Titanium Asset Protection, we understand that you want to make the asset protection process as smooth and cost-effective as possible for your loved ones. Your family has enough to handle in dealing with their loss, so we will do everything in our power to help make this process less intimidating. Please contact us at (714)-827-9955 for a free consultation. A member of our experienced team will gladly answer any questions or concerns you might have regarding the probate process.