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As part of a well-rounded estate plan, there are certain documents many individuals or couples choose to include. A will, trust, and powers of attorney instructions are among the most common. Those who may own a business or have other liabilities should also build another plan focused on how to protect their assets.
What is Asset Protection?
Asset protection is the process of safeguarding assets from seizure. This is not about hiding assets or engaging in illegal activity; rather, it is about taking proactive measures to protect assets from creditors, lawsuits, and other potential threats. It is an important part of any estate plan, as it can help protect an individual or couple’s hard-earned wealth and ensure that loved ones are taken care of financially in the event of an unforeseen circumstance.
How Can I Protect my Assets?
Protecting assets must be done carefully to ensure they are unattainable to creditors. Unfortunately, by the time many think about protecting their assets, it’s already too late.
When considering creating an asset protection plan, ensure these most common mistakes are avoided.
Choice of Entities
There are multiple options when it comes to owning property including having it in the owner’s name or an LLC. While an LLC can help protect personal assets, there are ways this could be detrimental to the property owner including:
- Signing their name rather than the LLC’s name on contracts or other financial agreements;
- Loan defaults;
- Not observing corporate formalities; and,
- Wrongful or negligent acts.
By not understanding which entity option is best, a property owner could end up not having their assets protected at all.
Understand Privacy Rights
Just as it’s crucial to have the right entity in place, if a creditor can not “find” a person or their assets, it will be harder to file a lawsuit against them. This concept can be seen in any courtroom — it’s much harder, and sometimes not possible, to file a complaint against a person or entity if that person’s information is unavailable.
Maintaining privacy can be especially difficult, especially with information about individuals typically one a click away via an internet search. That’s why individuals must consider keeping their personal information private regarding asset protection.
Not Coordinating with Other Estate Planning Documents
While there is no one-size-fits-all approach to estate planning, it’s critical to ensure all documents reflect the same information as one another. For example, if one document has property listed under the individual’s name, but another document has the property listed under an LLC’s name, this will put that property at risk. Creditors may file a lawsuit for that property if the property isn’t fully protected and listed properly in all estate planning documents.
The best way to ensure this doesn’t happen is to speak with a dedicated asset protection attorney so property owners can feel confident knowing their assets are secured.
Waiting Too Long
Just as with anything in life, no one can predict the future and no one knows when an unexpected life event will occur. When it comes to protecting assets, it is never too early to start. Putting this type of protection in an estate plan now is always in the property owner’s best interest. This way, should an unthinkable situation occur, the property owner and beneficiaries will not have to worry about whether assets are protected or not.
Not Having a Plan
Along the same lines, having no plan in place compared to some plan is never in anyone’s best interest. Not having a plan at all can bring undue stress to property owners and beneficiaries as they try to properly protect assets before creditors come after them or lawsuits are filed. If a property owner receives a notification from a creditor or is served as part of a lawsuit, then it is too late to try and protect assets.
How Krause Estate Planning Can Help
Our Wisconsin asset protection attorney at Krause Estate Planning has seen it all. Whether you’re being proactive about asset protection or are worried that assets may be vulnerable now, Dan Krause has the experience you need to feel confident about your situation. Read what past clients have to say about his work and reach out today to schedule a consultation. (608) 344-5491
Krause Estate Planning proudly offers services throughout Wisconsin, including in Janesville, Madison, Middleton, Milwaukee, Oregon, Sun Prairie, Verona, and Waunakee.