You have worked hard to have everything you own. That is why you cannot just leave your assets open to seizure in lawsuits or debts. You have to protect them.
Each year over 40 million lawsuits are filed in the United States, many of them seem frivolous. However, many of these frivolous lawsuits end with the plaintiff receiving millions of dollars in payout.
Lawsuits like these can be brought against you!
If you have a significant amount of assets that are unprotected you need to secure them now. Here are some of the best ways to protect your assets from lawsuits.
Making sure that you have insurance is one of your best defenses. Always ensure that you have enough coverage for each of the following:
The minimum that is required by most states is usually not enough should a lawsuit be brought against you. You must ensure that you go beyond the minimum amount set by your state of residence so that you have enough to cover your assets if someone sues you.
In addition to the regular types of coverage discussed you may want to consider getting an umbrella coverage policy. Umbrella coverage is an extra layer of protection that will come in handy in case your regular coverage does not provide enough coverage in a large lawsuit.
Get Your Business Incorporated
One of the best steps you can take to protect your business is to get it incorporated. It is more likely than not that that legal action will come against your business rather than you (playing the odds here). However, this is not a steadfast rule as the determination whether to litigate against you or your business are wholly separate decisions for any potential plaintiff.
The crux of this idea is directed at people who run small businesses (or home-based businesses). When you turn your business into a legal entity (like an LLC) you can protect your assets should someone bring a lawsuit against your company.
You should connect with a business planning attorney to go over all your options.
Take Out A Retirement Plan
A great way to protect your money is to take out a retirement plan. If your assets are held in a 401(k) retirement plan, they are protected from legal action.
Check your state laws to get the details. However, generally speaking, most courts have ruled that funds held in a retirement plan cannot be touched by lawsuits.
Establish an Irrevocable Trust Fund to Protect Your Assets
When you establish an irrevocable trust your legal assets can be protected from any challenges presented in a lawsuit.
The jist of this strategy is that the trust becomes a separate legal entity (from you and your family) and it would not be affected should a lawsuit come against you.
This means you can protect your children, or other family members that you want to inherit your assets, from being potentially left penniless if a serious lawsuit is brought against you – or your desires as to where your assets should go were to be challenged after your death.
If you have a significant amount of assets then it is in your best interest to protect them from lawsuits that can wipe them out. There are several ways in which to protect them.
You can get a retirement plan or insurance. You can also protect your assets by forming a corporation or LLC. Finally, one of the best ways to protect your assets is to create an irrevocable trust.
If you would like more information on how to legally protect your assets, please contact us.