The greater your assets, more important it is to take steps
If you own assets like a home or vehicle, you should take steps to protect these assets if you are ever sued. Lawsuits are more common than ever and they can occur after any number of incidents like a car accidents or slip and fall. Even the typical homeowner may face financial ruin due to a lawsuit if they are found at fault for an accident. The greater your assets, the more important it is to take steps toward asset protection.
Here’s how asset protection attorneys Kurt and Blake Johnson can help you safeguard your belongings and savings from litigation.
What Is Asset Protection?
Planning to protect your assets from claims.
Asset protection can take many forms. Depending on your level of risk and assets, options may include everything from additional liability insurance to an asset protection trust. Asset protection uses completely legal tools.
This form of planning does not involve hiding business or personal assets, nor does it deprive the government of taxes from income earned with your assets. Think of asset protection planning as creating a shield around your assets from attacks by plaintiffs and creditors.
Why Do I Need to Protect My Assets?
Prevent or significantly reduce your risks.
We live in a litigious society. Your assets can be at risk if you do not have enough insurance coverage, cause an injury, or make a business mistake. If a judgment is obtained against you, you can be forced to liquidate your assets.
All it takes is a single lawsuit to leave you in financial ruin without careful planning. An asset protection lawyer can help you create a smart plan to protect your assets from many likely what-if scenarios.
From Whom Am I Protecting my Assets?
Your beneficiaries cannot do anything to prevent probate
Even the average consumer can face threats to their personal assets. Asset protection is designed to protect your assets from creditors, lawsuits, bankruptcy, and more. Think you do not need a lawyer that is experienced in asset protection?
Consider these scenarios.
- If you own a business, creditors, customers, or consumers may have a claim on your assets. This can happen if you lack enough business insurance, fail to pay business debt, or make a mistake.
- As a homeowner, your assets can be at risk if someone is hurt on your property. You will also be liable if your dog injures someone. Homeowners insurance typically pays these claims. Still, most people do not have enough coverage to pay for a serious injury claim.
- If you are involved in a car accident and found at fault, your personal assets can be at risk. Most people lack the car insurance coverage for even a moderate injury claim. The injured party can file a lawsuit against you. If you lose the lawsuit, your savings, home, and car are at risk. These claims can also arise from accidents or injuries on your property.
- What if you ever need to file for bankruptcy? You may lose personal assets that aren’t exempt. Bankrupty is designed for people who are financially insolvent. The bankruptcy trustee can take any non-exempt assets. This can include equity in your car and your home and even money in your bank account.
- Your personal and business life both involve many financial contracts. This means there is a risk of contract claims. A common example is a lawsuit arising from a foreclosure or mortgage deficiency. You may also have liability as a guarantor if you co-signed a loan and the other person defaulted. If you are a professional, you may face professional liability claims.
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Asset Protection Planning Begins Before a Claim.
Be prepared before a claim, because after is too late.
It’s essential that you view your assets as something you may lose if something goes wrong. The time to begin this planning is before an accident — not when you are expecting a lawsuit. Most states have fraudulent transfer laws that make it illegal to try to hide assets before or after a lawsuit. If you do, you may face even bigger problems.
Most people do not think they will be part of a lawsuit until it happens. If you think you are immune to a claim, consider that every year:
- Over 2.4 million car accidents cause injury and someone is almost always liable.
- 850,000 people receive treatment for dog bites.
- Over 1 million slip and fall injuries are reported.
These are only a few of the common causes of consumer lawsuits.
The good news is Nevada is considered one of the best states for asset protection. It was one of the first states to pass a law allowing domestic asset protection trusts (DAPTs). Nevada also has beneficial laws regarding trust formation and administration. In addition to progressive laws, Nevada also has no income tax and generous exemptions.
How Can I Protect My Assets?
Hire a Las Vegas attorney who is experienced in asset protection.
Asset protection comes in many forms. An experienced asset protection lawyer can help you explore options that will safeguard your assets. A strong asset protection plan will consider the risks you face and the types of assets you hold. Attorneys Kurt and Blake Johnson may recommend these solutions, among other options.
A retirement account is a great way to protect assets for two reasons. In addition to being shielded from bankruptcy and litigation, an IRA also helps you plan for retirement. Under federal law, qualified retirement accounts have unlimited protection. Individual Retirement Accounts (IRA) have up to $1 million in protection. This protection can guard against litigation and usually bankruptcy.
Consider moving assets into a retirement account you will not be able to use until the age of 59-1/2. Keep in mind you will have an annual contribution limit.
Part of asset protection planning may include assessing your home equity. The Homestead Exemption Protection law of Nevada offers homeowners a great way to protect assets. In Nevada, homeowners can protect up to $550,000 in equity from creditors. To take advantage of this option, you will need to contribute more principal to mortgage payments. This increases equity in your home.
Keep in mind this protection will not be automatic. You will need to file a valid homestead declaration. This declaration must be updated if you refinance or quitclaim the home to a living trust. An asset protection manager can help you explore how this option can benefit you.
Make sure you know the limits on your liability insurance. Your insurance policies will be your first line of defense against a lawsuit. Liability coverage is usually affordable. Make sure you get limits high enough to protect you. An umbrella insurance policy may be recommended by your asset protection manager.
Insurance is a very important barrier against many threats you may face. Still, it is not always enough to fully protect you. For example, it can’t protect you against exceptions in your coverage or beyond your policy limits.
It will also be no help if you ever file for bankruptcy. Asset protection planning adds an additional barrier for the greatest protection for your assets.
Asset Protection Trust
Placing your assets in a trust is one of the most powerful ways to protect your assets. An experienced asset protection attorney can ensure your trust is set up to shield your assets from lawsuits.
There are numerous laws that protect trust assets as long as the trust is correctly funded and drafted.
Business Entity Creation
If you own a business, it’s important to separate personal assets from business assets. This can be done by creating a legal business entity. If you have a partnership or sole proprietorship, there is no legal distinction between you and the business. If your business is sued, for example, your personal assets are at risk. A corporation or LLC can protect you from losing personal assets if there is a lawsuit.
To form a business entity and enjoy liability protection, you must follow specific rules. These rules include:
- Separating personal and business expenses
- Maintaining adequate insurance for the business. This insurance should cover business errors that may lead to a lawsuit.
- Revenues should go toward specific business assets. Invest profits in protected assets for the greatest protection.
- Electing corporate status with an LLC can offer additional protection. This will also require extra reporting.
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Las Vegas Asset protection Attorneys
Discuss your strategy with an asset protection lawyer before making any decisions. An asset protection lawyer has the training and legal knowledge to offer excellent advice. This can help you properly protect assets without losing control.
Asset protection is complex and you don’t want to make a wrong move in today’s litigious society. You do not need to be wealthy or have sizeable assets to benefit from asset protection. Contact asset protection attorneys Kurt and Blake Johnson before you are facing bankruptcy or a lawsuit.
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