Protect Your Assets Before It’s Too Late
Life is about building—your career, family, and, of course, your assets. From retirement accounts to real estate, most of us work diligently to create a financial cushion. But one lawsuit could potentially unravel everything. In today’s world, anyone can be sued for nearly anything, and even a frivolous claim can result in significant legal fees or worse, the loss of your hard-earned assets.
The key to preserving your financial future lies in proactive planning. Below, we’ll explore simple yet effective strategies to protect your assets from lawsuits before trouble strikes.
Asset protection is not a DIY project. Attorneys excel at helping you safeguard your wealth before any threats arise. Don’t wait until you’re served with a lawsuit—by then, your options are limited. Proactive planning with an attorney ensures that you have a strong defense ready.
Business owners and property investors should strongly consider structuring their holdings as limited liability companies (LLCs). A Series LLC, particularly useful in states like Nevada, allows you to shield multiple properties or businesses under one umbrella while maintaining individual protections for each.
In Nevada, up to $605,000 of your home’s equity is protected from creditors. Filing a homestead exemption is simple and inexpensive, costing around $35. Just remember to refile after refinancing or other title changes.
In Nevada, up to $500,000 of IRA assets are protected from creditors, while workplace retirement accounts like 401(k)s often have unlimited protection under federal law. Other states may offer less generous safeguards, so check your state’s rules to understand your exposure.
An umbrella policy provides coverage above and beyond your standard home and auto insurance. For as little as $500 per $1 million of coverage annually, this policy not only protects your assets but also brings the insurance company’s legal team to your defense if you’re sued.
Marriage is a partnership, but it doesn’t have to mean pooling every asset. Prenuptial and postnuptial agreements are effective tools to delineate ownership of assets, especially in community property states like Nevada.
Before lawsuits arise, consider gifting assets to family or trusted individuals. Under current federal rules, you can give $18,000 per person annually (or $36,000 as a couple) without impacting your lifetime gift tax exemption of $13.61 million per individual. However, gifting after a lawsuit begins is a big no-no—courts will see it as an attempt to shield assets.
As a last resort, filing for bankruptcy can protect certain assets while allowing you to restructure or discharge debts. It’s not an ideal solution, but for some, it’s the only path forward.
Asset protection strategies are far more effective when implemented ahead of time. Waiting until a lawsuit is imminent could leave you with limited options and significant risk. By proactively adopting these measures, you can safeguard your wealth and ensure your financial security for years to come.
If you’d like help getting started, contact a qualified attorney or financial advisor who specializes in asset protection.