Financial Planning and Asset Protection Should Be Considered As A Pair
First comes financial planning.
When it comes to financial planning and asset protection, once you’ve created a financial plan, the very next step is to make sure all of your current and future assets are properly protected.
Keep Your Assets Safe And Out Of Reach
So few people take financial planning and asset protection seriously. Sure, the majority of people do the minimum to protect their homes and automobiles with the requisite auto and homeowner’s insurance. But, we live in a society that is more litigious than ever. Asset protection means keeping your property safe and out of reach by someone who wins a lawsuit against you. Accidents in which someone gets hurt and non-payment of mortgage are two examples in which lawsuits can be initiated and your assets can be claimed.
How To Protect Assets
You may wonder, how do you protect your assets from lawsuits? This is achieved through the process of asset protection planning, which means taking assets that are subject to creditors’ claims, called nonexempt assets, and repositioning them as assets that are out of the reach of creditors’ claims, called exempt assets.
Don’t Wait Until You’re In A Lawsuit
As I mentioned at the start, before you can have an asset protection plan you must have a financial plan. And, even more importantly, you cannot begin an asset protection plan if you are already in a lawsuit. Some people may think they can simply transfer assets out of their names if and when they are in a lawsuit, but a court will see right through these ‘fraudulent’ transfers. The judge will have the transfers reversed and the assets turned over.
Short- And Long Term Financial Goals
In order to put together a comprehensive asset protection plan, you will need to integrate two important goals: Your short term and long-term financial goals, and your estate planning goals.
Once you examine your short term and long-term financial goals, you will learn about your current and future sources of income, how much money you will need to retire, and how much will be left over to pass on to your heirs through your estate plan after you die. When your financial plan is in place, you can review your current assets to determine if they are exempt from creditors and, if they are not, then reposition them to become exempt. A financial plan will also allow you to plan for positioning assets that you intend to acquire in the future to be protected from potential creditors.
Why Financial Planning and Asset Protection? Really… You Just Never Know
You never know if you will ever be involved in a lawsuit. But, you can have a plan in place that will protect you in the event that you are. And don’t overlook all of your digital assets in addition to the more traditional tangible assets that need to be protected. A comprehensive financial plan and an estate and asset protection plan can protect you in the event the unexpected happens.