By James Turner, Company Formation Specialists
How often do you think about how you can make more money versus how you can protect what you’ve already got? Essentially, anyone with money needs asset protection, particularly high net worth individuals.
Effective planning ensures that no matter what happens, you, or those you trust, will remain in control of your assets. The goal is to prevent or significantly reduce risk by protecting your business and personal assets from the claims of creditors.
A robust plan will employ legal strategies that can deter a potential claimant or prevent the seizure of assets. Strategies can include separate legal structures or arrangements such as corporations, partnerships or trusts. Structures will depend on assets owned, and the types or creditors most likely to pursue claims.
Here are tips for protecting your assets.
A trust is simply a way of managing your assets, whether it’s money, investments, land, property or family heirlooms. One of the biggest advantages is control. A trust gives you the ability to name specific beneficiaries, and place conditions on how and when your assets are distributed, without the cost, delay and publicity of court proceedings.
Trusts also have the ability to reduce estate and gift taxes and enable you to name a successor trustee and protector, who are empowered to manage the trust assets if you ever become unable to do so.
“Trusts are varied and complex. There are different types of trusts, each with its own advantages and disadvantages which you need to discuss thoroughly before setting up. Trusts put a legal barrier between your assets and everyone other than your chosen beneficiaries and guarantees that wealth can pass down through generations safe from divorce, remarriage, illness and sometimes even tax” says James.
Leverage Protected Entities
Protected entities such as corporations or LLCs (Limited Liability Companies), include provisions that keeps creditors from taking the company or its assets.
“Utilising protected entities is particularly beneficial in order to keep your business and personal finances separate. If you own your business, you may be exposed to personal liability for the business’ debts and can be financially responsible for fraud or criminal acts committed by others – you don’t want that” adds James.
Own Nothing Personally
“When you get sued personally, assets in your name become vulnerable” says James.
Own a car? Owning it in a trust keeps your name out of public records. Own a property? Hold it in a company for lawsuit and asset protection. Have sizeable savings or investments? Placing them in a trust with your children as beneficiaries helps future proof your earnings.
“We are not suggesting not to own anything, but don’t hold primary assets in your own name” he adds.
Plan, Plan, Plan
“When you are protecting your assets, it’s vital you plan and prepare. Most asset protection measures don’t work if you’re already in trouble, so the most effective protection must be put in place before you even think you need it,” advises James.
Turner Little specialises in creating bespoke solutions for individuals and businesses of all sizes. The knowledge and expertise of their specialists will be able to assist with any enquires, no matter how complex.