Did you know that more debt collectors have been leveraging the courts? If you want to learn how to protect assets from lawsuit issues, we can help.
In this guide, we’ll go over how to protect your assets.
Want to learn more? Keep reading.
1. Look at Getting Liability Insurance
You can protect your assets by having a solid liability insurance policy. These policies get called umbrella policies.
If you’re wealthy, you should at least have a policy that will cover 10 million dollars. Having 20 million or more of coverage is advisable, depending on your situation.
Liability insurance is an effective way to avoid losing huge assets in lawsuits.
2. Protect Business Entities
Your personal and business assets should get separated. You can do this with a limited liability business entity, which will ensure your wealth gets protected.
If you’re self-employed, you could become liable for lawsuits arising in business.
Two business entities that offer limited liability protection to owners are a Corporation and a Limited Liability Company. Use one to protect your assets from lawsuit claims against your business.
You can transfer assets to the business if you’re worried about a personal liability claim. This will protect the assets that belong to the business in this situation.
3. Asset Protection Trusts
Asset protection trusts are a powerful asset protection tool. These provide maximum asset protection to assets in the trust, and it also protects the beneficiaries of the assets.
A primary advantage of asset protection trusts is that they let the trust’s granter be the sole beneficiary.
Transfer assets from your name into the trust. Also, remain as the beneficiary, so you benefit from the proceeds of those assets.
The assets will be protected by the trustee who has the responsibility of the assets. They aren’t under an obligation to turn the assets over if the grantor gets sued.
4. Retirement Accounts
An ERISA-qualified retirement account will enjoy complete asset protection if bankruptcy occurs. IRA accounts get protected up to one million dollars.
Transferring assets into a retirement account will protect them. Protect your assets from bankruptcy or unexpected lawsuits.
The rules will differ depending on the state. It’s essential to speak to a retirement plan expert or asset protection lawyer.
5. What About Real Estate Protection Laws?
Homestead exemptions will protect the equity in your main residence. Your main residence isn’t an investment property. The exemption will protect against seizure by creditors.
Yet, homestead exemptions will vary from state to state. In some states, homeowners will have an unlimited homestead exemption. Find out more about the law in your state.
If you want to keep learning, read more about the protection of assets.
You Can Protect Assets From Lawsuit
We hope this guide on how to protect assets from lawsuits was helpful.
Consider working with a retirement plan expert or hire an asset protection lawyer. They can guide you on what steps you should take in your particular state.
Are you looking for more financial advice? Keep learning how to grow your wealth and protect it by learning more on our blog.
