Asset Protection: What It Is and Common Strategies for Asset Protection

One of the most crucial things a person can have is financial security. One of the best ways to ensure financial security is through asset protection. It is vital for everyone to understand asset protection. Whether you are a business owner, investor, or just someone seeking to preserve your hard-earned wealth, it is vital that you understand asset protection and the best strategies for asset protection. In this article, we define asset protection and share some of the common strategies for asset protection.

What Is Asset Protection?

Asset protection is not one thing in particular. It encompasses various strategies and techniques designed to safeguard one’s assets from legal judgments, such as personal injury judgments, taxes, creditor claims, seizures, or unwarranted beneficiaries. Asset protection aims to shield assets belonging to individuals and businesses against the claims of parties trying to seize the assets. It is not too late if you still have not taken steps to protect your assets.

Common Forms of Asset Protection

Several legal instruments can be used to protect assets. Selecting the best asset protection strategy requires a thorough evaluation of certain factors. A qualified asset protection attorney can help you choose the best asset protection strategy. They can tailor a strategy that aligns with your specific needs and objectives. When it comes to asset protection, while it is never too late to protect your assets, it is best to have a strategy before a claim arises. If you don’t have a strategy in place and, for example, a creditor claim occurs, you may be accused of defrauding the creditor.

Below are a few of the common strategies for asset protection;

Asset Protection Trusts

This irrevocable trust holds assets based on your discretion to protect them from creditors. An asset protection trust can be offshore or domestic. Domestic trusts are within the United States, whereas offshore trusts are held outside the country. APTs are often used as the strongest method of asset protection.

Family Limited Partnerships

A family limited partnership is one in which you transfer ownership of your investments or business. In a family limited partnership, there are general and limited partners. General partners can manage and control the partnership, while limited partners have no role in the management and control of the partnership. FLPs create a legal barrier between assets and potential threats, such as creditor claims. Transferring assets into an FLP keeps them separate from your personal property.

Limited Liability Companies

A limited liability company can allow you to retain control over your property while protecting it from creditors. LLCs offer a layer of protection by separating personal assets from business liabilities. In the event of a creditor claim, the creditor can typically only access assets owned by your business and not those you hold personally.

Prenuptial Agreements

To protect your assets in the event of a divorce, consider drafting a prenuptial agreement before you get married. This legal agreement can allow you to choose which assets remain yours in the event of a divorce, even if the assets would otherwise be subject to property division.

Contact a Deerfield Beach Asset Protection Attorney

There are many other asset protection strategies. Contact our Deerfield Beach asset protection attorney at the Law Office of Adam L. Skolnik, P.A., to learn about the many asset protection strategies and for help determining the best strategy for you.