3 Asset Protection Tips You Can Use Now

A common misconception is that only wealthy individuals and people in high-risk professions, such as doctors or lawyers, need an asset protection plan. However, anyone can be sued. A car accident, foreclosure, unpaid medical bills, or an injured tenant can result in a monetary judgment that could crush your finances.

What Is Asset Protection Planning?

Asset protection planning uses legal structures and strategies to safeguard assets (accounts and property) from creditors by completely or partially protecting them from a creditor’s reach.

Unfortunately, this type of planning cannot be done as a quick fix for your existing legal problems. In fact, transferring assets to an individual or entity to shield them from existing creditors could be considered fraudulent, resulting in legal penalties. You must instead put an asset protection plan in place before you know about a lawsuit. So, now is the time to consider implementing one or more of the following tips to protect your hard-earned money and property from creditors, predators, and lawsuits.

Asset Protection Tip #1: Load Up on Liability Insurance 

The first line of defense is insurance, including homeowner’s or renter’s, automobile, business, professional, malpractice, long-term care, and umbrella policies. Liability insurance not only provides a means to pay money damages but can often include payment of all or part of the legal fees associated with a lawsuit. If you do not have an umbrella policy, speak with an insurance agent to see whether one is right for you and your situation, as these types of policies are relatively inexpensive compared with more advanced asset protection strategies. Also, check your current insurance policies to determine whether your policy limits align with the value of what you own, and make adjustments as appropriate. You should then review all your policies annually to confirm that the coverage is still adequate and the benefits have not been reduced or changed.