Divorce Attorney Salt Lake City: Asset Protection Strategies

You have worked hard all your life, perhaps as a contractor, small business owner, nurse, politician, or any other career that required your steadfast focus, and perseverance. You have created a life, and wealth through tough labor. The last thing you need is to invalidate your hard work and lose all that you have saved. That’s exactly what can happen when you’re caught in a lawsuit. I’ve seen this time and time again as an asset protection attorney, that you can do almost everything right and still lose because you didn’t protect what is yours. That is also why it is so essential to know strategies to protect assets from lawsuits.

Strategies to Protect Assets from Lawsuits

You may have worked years to afford that boat, even decades to afford that RV, why should anyone else obtain those assets because of a human misstep. They shouldn’t. As humans, we’re all capable of missteps, and because of this, we need to outline ways to protect assets from lawsuits; need to know what our opponents can seize. Thus, we need an asset protection strategy.

Insurance: Good But Not Enough

First and foremost, regardless of what you may think about insurance, it is good to have but it is not enough. There are severe limitations. Most civil tort lawsuits nowadays allege “fraud,” whether justified or not, because the layer can collect a greater sum. If a plaintiff makes that allegation, true or not, the insurance companies will tuck tail and run the other way. Regardless, it is still wise that you fully cover your net worth with an umbrella insurance policy. In other words, if the policy only covers part of your net worth, it is not sufficient. You can expect to spend about $250, on average, per $1,000,000.00 of coverage. This is a steal, should you ever be in a situation where your assets are in jeopardy.

You need to also be aware of who you may inherit money from. If you’re in your father’s will, and are expecting to receive his estate, be sure to cover the full amount of which you expect. Doing so covers all that he worked hard for. Imagine a lawsuit that invalidates the estates of those you love, those of whom you were expecting an inheritance. It’s not only upsetting, it’s personal. Protect yourself with adequate insurance, and have some peace of mind.

Owning a Business

If you own a business, it’s critical you use appropriate business entities. You need to select the right one as well. Remaining as a sole proprietor of your business offers zero protection from liability. As with the above-mentioned insurance, this acts as a guard against frivolous business lawsuits. Having the right business entity for your small business, is in a way, insurance, and will protect you from those who work to assume your assets.

Real Estate

If you own rental property, for instance, consider owning it in an LLC (a Limited Liability Company). An additional layer we generally use is a land trust. The land trust owns the property for privacy of ownership. Then the LLC owns the land trust. Technically, the LLC is the beneficiary of the land trust. It’s important to know the multiple ways that asset-intruders get their hands on your hard work. This way, so you know how to stop them beforehand. The use of proper tools is one way of doing so.

More Strategies to Protect Assets from Lawsuits

What about divorce? What about other jointly-held accounts? It’s crucial you protect your assets from personal intrusion. This may seem “cold” at first, when considering it, but it’s not. One way to overcome the awkwardness of mentioning safeguarding yourself within a jointly-held account, is to mention the benefits for the other party. Jointly-held accounts have the potential to wreak havoc on your assets, in the event of an unlikely divorce, or separation by one party (divorce or other relationship). This conversation is useful to those you hold accounts with jointly, as they too will see benefits in protection.

Trusts

There are many types of trusts. To protect yourself from lawsuits, the offshore trust is one of the strongest asset protection strategies. Set it up the Cook Islands and with an offshore account in Switzerland and it is virtually bulletproof. We have never seen a client lose money in a lawsuit when we have established this structure for them.

Partnership Dangers

You also need to avoid partnerships. Like jointly-held accounts, partnerships, if used at all, the parties need to formalize it. This helps to minimize disputes between partners. The problem is that it is difficult to protect your assets in the event your partner commits an act that jeopardizes the partnership.

Consider you have a partnership with someone erecting above-ground pools. What happens when your partner is working alone, one day, but makes a serious mistake and someone ends up getting seriously injured or killed. Your assets are in jeopardy, even though you had no part in the action. You were merely his partner. The last thing you need is for your partner John’s mistake, to cost you, possibly, your life savings. So, it’s important to consider all partnerships carefully, if you used them at all. The bottom line is this: Avoid partnerships like the plague. Your partner’s mistake can cause you to lose about everything you own.

Corporations for Asset Protection

When you run a business, establish a corporation. Operating your business as a corporation gives you a legal shield should a customer sue your business. When a lawsuit strikes, the company contains the liability inside. Rather than exposing your personal home, bank account, automobiles, savings and everything you’ve worked so hard for the company acts as a lawsuit shield. It is easy to have an experienced professional (such as this one) establish a corporation for you. Simply give them the name you want to call your business, the name of the first director(s), and then cover the cost of formation. When an ugly lawsuit against your business rears its head, you will be glad you did.

LLCs for Asset Protection

Another area people need to be careful, as partially discussed earlier is the importance of forming LLCs, over a sole proprietorships or partnerships. Sole proprietorships or partnerships essentially mean that you have no safeguard. You can be held personally liable for any misstep you take, any misstep your partner takes, or any perceived misstep. An LLC can have great tax benefits for holding income-producing real estate or other passive investments, such as stock market investments.

It is best to hold one piece of rental real estate in one LLC. That way, if someone sues the LLC, only one property is at risk. You have effectively cubby-holed your liability to one property each.

Sole Proprietorship Warning

Many people work as contractors, under the sole proprietor designation. The problem with this is that you open all your assets for the taking should you make a wrong move. Imagine you are a tutor. Your business is formed only with your first and last name. You’re not incorporated. You don’t have the LLC designation.

What happens to you as a tutor when a student looking for some form of attention accuses you of sexual harassment? You are in big trouble, is what happens. What if your employee cause bodily injury to another person? It happens all the time. Everything you have worked for is now in jeopardy, because of a simple, false accusation or employee slip up. Don’t let someone take your earnings because you failed to form a simple LLC. The process doesn’t take very long, and in doing so, you are saving yourself from poachers.

Retirement Funds

Another way to protect your assets is to use a retirement fund. These funds are usually well protected in most states, and if you are not in need of a certain amount of money, or compounding income, being smart, is to transfer those funds into that account. The only hiccup with this is that you need to consider, many of these accounts require you to wait a certain period to remove funds in order to remove them untaxed. You always have access to remove any funds from these accounts as you like, but there is usually a penalty for withdrawing too early, usually before around age 60, give or take. Stay up to date on the latest retirement account statues where you live.

Free Initial Consultation with an Asset Protection Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you need legal help, call Ascent Law for your free consultation (801) 676-5506. We want to help you.