Protecting Wealth

Why Protect your Assets?
Once you have accumulated wealth the next thing to do is to make sure it is well protected. There's little point in spending hours and hours growing your net worth if that wealth was left exposed to unforseen action or circumstances that could threaten it. You would never know what decision a judge could bring in a legal action that could wipe out your finances. Once a lawyer discovers that you have substantial net worth, rest assured you would be a target from a creditor's lawyer or from an aggrieved employee's claim or recovery proceedings fron the IRS Commissioner or matrimonial action from a former spouse etc.

If you don’t own anything, obviously there would be no benefit for the other party to pursue a claim on your assets. You have to protect your assets today because no one knows what is around the corner. We often hear about men and women of wealth who have been bankrupted overnight because of some unexpected action or claim they never expected.

Protecting your cash and your assets is therefore not an option. Do it and do it soon.

What is Asset Protection?
Asset protection is to do with protecting your assets. It is a process by which you set up a plan that will structure your business and personal affairs in such a way that your assets are protected from the grasp of people who may want to get their hands on it for various reasons.

Asset protection is legal and ethical and it has nothing to do with hiding your assets but everything to do with structuring your affairs so that your assets are kept outside of the potential reach of those who may try to take them. It is a sophisticated method of business planning using lawful estate planning strategies.

An analogy is that of insurance. You take out an insurance policy to protect yourself against any financial losses should a disaster occur. There is a cost involved, but you are prepared to pay that cost in the hope that you will be able to recover your position should a disaster strike.

Asset protection is similar in many ways. No one can see into the future. You do not know when a crisis will occur or when disaster will strike. If such a crisis or disaster happens then there is the possibility that you could lose your assets. For example, if your business fails. You may suffer this failure through no fault of your own but nevertheless you are put into a situation of leaving your personal assets at risk.

Your business creditors may try to bring action to recover any money owing to them from your own assets. It is wise to put in place strategies well before such an event occurs to protect those assets. That is what asset protection is all about. Setting up a plan that is legal but designed to protect you from potential, future problems.

Many Risk and Threats to your Wealth
There are many risks and threats to you wealth.

Here is a shortlist of examples:

  • Being pursued for a guarantee you signed.
  • Having a lawsuit against you from a former business partner.
  • Having tax disallowed and the IRS going back a few years to calculate your liability.
  • Losing a lot of your wealth to an ex-spouse in a divorce settlement.
  • Being liable as a director in your company for the actions of the other directors.
  • Being liable for the debts of a partnership due to the actions of any other partners.

These are examples of how you can lose your wealth very quickly if you are on the wrong end of legal action. The problem today is that people bring legal action at the drop of a hat. Our society has become heavily litigious and there is no security for anyone, regardless of his/her wealth.

The up side is that there are strategies you can put in place to protect your assets.

You Must do Asset Protection Urgently
Today's society is a very litigious one. More and more we hear of multi million dollar law suits being brought to courts between parties for one claim or another. Many plaintiffs arrive at the conclusion that they have little to lose in bringing an action because the party that they are seeking compensation from may have very deep pockets.

Legal action can arise from many sources.

  • Professional claims.
  • Business activities.
  • Damages for motor vehicle accidents.
  • Defamation.
  • Investment loss.
  • Negligence.

Many of these situations can be covered adequately by insurance but this is not always the case for everything. Often the insurance cover held may not be sufficient to meet the potential compensation that could arise in a legal action.

People spend a lot of money with their lawyers to set in place a sound estate plan that will ensure that their family receive their assets on their death, but give little thought to safe -guarding their assets while they are still alive.

Many don't realise that unless they put in asset protection it is possible that they could end up with few assets left for the heirs to share. Asset protection should be an integral part of any estate planning structure.