People with substantial assets, and those who are about to receive them, are wise to look for ways to protect those assets. Here are five asset protections strategies that can help you preserve your wealth:
Increase liability insurance. If you come into sudden wealth or have already accumulated it, you are a more likely target for a lawsuit, simply by the virtue of having wealth. You should have umbrella liability insurance coverage for an amount that is at least equal to your net worth.
Keep assets separate. In a community property state like California, it may be best to keep assets from an inheritance or business sale separate. While this may not be an issue for many, it could be for some who have children from a previous marriage or those contemplating a divorce.
Review joint accounts. Any assets held in a joint account are at risk if the joint owner files for divorce or incurs a legal judgment or tax lien.
Formalize partnerships. Informal business partnerships can be recipes for disaster when it comes to asset protection. Form an LLC or other corporate entity to provide you legal protection for your personal assets.
Use corporate entities to shield assets. If you own rental property, you should create a LLC or corporation to protect your assets from unhappy renters. If you run a small business, create a corporate entity to keep your personal assets protected from legal action against the business.
The Flanigan Law Group is an Irvine estate planning, administration and litigation legal services law firm. To learn more about protecting your assets, contact the Flanigan Law Group at 949-450-0041.