It usually takes years to accumulate assets. After you have amassed wealth, you want to keep it. Perhaps for generations. Disaster could happen at any time. You could get sued. Or the stock market could crash. And natural disasters like hurricanes and floods are unpredictable. You need an asset protection plan. Here are a few things to keep in mind:
Devise Sound Plans Before Claims Arise
Claims and liabilities may arise when you are least prepared. To avoid this, plan early. Trying to transfer assets to other entities after claims have arisen will not work. The fraudulent transfer law could reverse all transactions effected after claims arise. You need to be ready long before they serve you with demand letters. You should assemble a team now. Your CPA, attorney, stocks broker, and insurance agent can help you create an effective asset protection plan.
Do Proper Asset Allocation
Ensure your asset portfolio reflects your pre-determined financial goals. Be realistic as you commit the funds. You need to build a portfolio that works regardless of whether the market is bullish or bearish. Be focused as you allocate resources between bonds and stocks. If you have at least ten years left before retirement, keep 70 percent of your wealth in stocks. Allocate the rest to bonds and index funds. As you age, make the necessary adjustments to your asset portfolio.
Let Insurance and Asset Planning Work For You
Think of insurance as a way to supplement asset protection. Do not treat insurance as though it were asset protection itself. An asset plan does not protect you from getting sued. And it will not pay legal fees. That is why you need both insurance and asset protection. Insurance can help you survive a fraudulent transfer claim. If you get sued, your insurer should be able to settle the claim if it cannot succeed against it. You have been paying premiums, right?
Choose the Right Entity
Discuss with your advisers on the best entities to use for asset protection. There are good reasons many people choose to build businesses around Limited Liability Companies, C-Corporations, S-Corporations, and partnerships. A Sole proprietorship could expose you to claims and liabilities that could potentially wipe off your assets. A creditor can attach not only business assets but also personal assets. You have zero protection when it comes to lawsuits.
Let your lawyer prepare a personal trust for you. Do not put personal assets into a business entity. Instead, put such assets in a trust. There are laws designed to keep trusts protected.
Use Stop Loss Orders
For stocks, place stock loss orders with your broker. Such a tactic acts as insurance. It protects you from loss should a given stock’s price start to fall. A stop loss order converts to a market order when the price drops below a certain point. A strategy like this can keep your asset portfolio protected from a market crash. Many people still remember the traumatizing flash crash of 2010. With the right plan, you can preserve your assets for generations.
Insurance
Your car should be insured. Anyone who gets a mortgage loan approval from a secured lender must buy home insurance. But home insurance may not adequately protect your assets. Do you own homes or commercial property in areas likely to flood? Buy flood insurance. In case of a disaster like a flood, you will receive compensation. The insurer may either replace the asset or pay for the repair. Even if you own your property free and clear, it makes sense to have sufficient insurance. Contact your preferred insurer and request flood insurance and home insurance quotes today. Keep your real estate protected.
Asset protection requires a sound strategy. Various methods exist through which you can secure your assets. Making proper plans can help you avoid a lot of trouble. Call your advisers today and create a plan. Time is of the essence.
