An asset is something owned by a person or business that has monetary value. Assets can be tangible, such as a house, car, computer, or clothing. However, assets can also be intangible items such as stocks and bonds, copyrights, bank accounts, or intellectual property. In this article, you will know tips on protecting your tangible and intangible assets.

Having trained legal professionals on your side when it comes to protecting your assets can help you weather any storm financially and ensure you receive the justice you deserve without going broke in the process.

The process of building a trust

One type of tactic for protecting your assets revolves around moving them to a jurisdiction where they can be legally protected. According to a Cook Islands trust specialist, your attorney can help guide you through the process of building a trust and ensure that any plan made on your behalf is comprehensive and detailed enough to give you the protection you need. If you are planning to pass on money, property, or possessions upon your death, setting up a trust will protect them from being taken by creditors. Property that is held within a trust may not be used by the creditors to pay off debts. This includes credit card debt, student loans, personal loans, and other forms of debt. This type of trust must be structured as an irrevocable trust in order for it to work correctly.

Create an LLC 

Another effective way of protecting your assets is to form a corporation or LLC, depending on where you live. If you are married, both spouses should reside in the same state as the business. This will not avoid double taxation, but it will allow each spouse to only pay income tax once. Forming an entity offers many benefits including limiting liability and reducing income taxes; however, there are costs associated with forming an entity. To keep these costs minimal, one person (ideally the primary earner) should be listed as an employee of the company without compensation. This means that he/she will receive no salary yet retain all benefits enjoyed by employees such as health insurance or retirement plans; however, if you are considering incorporating, always speak to an attorney first.

An LLC offers asset protection without sacrificing control over the assets owned by the company. Because the majority of owners maintain full control over their finances, creditors cannot take them personally responsible if something happens with the company’s finances. If anything were to happen with all three types of companies, the creditors would only be able to pursue the value of the business and not any personal assets. Incorporating is the most effective way to protect yourself and your family from lawsuits because it limits liability. For example, if a corporation purchases a car and that car gets into an accident, only the assets of the company (the car) can be used to satisfy judgments against the corporation; however, personal assets such as your household furniture cannot be used to pay those debts.

The next step is to transfer all assets into the name of your business entity or trust. This may require selling some assets because, for example, it may not be advantageous to own an expensive piece of real estate in your own name when your company could also own that same piece of real estate. In addition, you should consider placing all valuable assets into a separate LLC or corporation that owns the other LLC or corporation that holds the original asset, because this will allow you to sell one entity and leave the other intact. Once these steps have been taken, it would be wise to inform family and friends about what you have done so they do not show up with a lawsuit against your business. If you are married, your spouse should also be informed about these protection measures so he/she is aware of what has been done and why. 

Own a house

A home is considered by law as an asset that has equity in it, meaning that there is money tied up in it. If your total equity was $50,000 and you owned a $200,000 home with a $150,000 mortgage you would have $50,000 worth of equity in your home. If for whatever reason you were sued and lost, you would owe 20% on top of what’s left (20% = 100k – 50k). However, if you lose the lawsuit and they seize your house because it’s worth 200k then at least all that work will pay off. Again you are only protected if you are successful in your court case.

Keep it in the family

When passing on money, property, or possessions to close family members they are protected from creditors since they are considered an asset of one’s own. If a creditor tried to sue the deceased with assets the assets will most likely be returned back to their original owner. For example, if Sarah was being sued for $10,000 but passed away leaving her husband John and daughter Jane each with $5,000 worth of assets then whatever is left after legal fees will be split evenly between John and Jane ($2,500 each). However, if she had no other relatives to collect her assets upon death then whatever is left after legal fees ($5,000) would go to the state

Secure an irrevocable asset protection plan  

An irrevocable asset protection plan can help you protect your assets. The process starts by transferring ownership of the assets from yourself to a properly formed trust. An attorney should be consulted before taking any steps in this direction, but it is generally easier to complete the transfer if the trustee of the trust is also an individual you trust. You may even want to appoint yourself as trustee, keeping full control over how and when certain decisions are made about your assets. It is important that a second person be elected as successor trustee in case something were to happen to you prior to settling all matters regarding your revocable trusts. It’s critical that you include a clause in your irrevocable asset protection plan that states any actions taken by the trustee cannot be taken under duress or against your will.

With the help of an experienced lawyer, you can prevent your property from being taken by creditors or avoid fines and penalties associated with breaking the law or missing court dates. While all of this may seem like a hassle, it will save you time, money, and stress in dealing with lawsuits in the future.