Protecting Your Assets from Creditors
Anderson Estate Planning helps individuals and families with effective strategies to protect assets from creditors and predators. Asset protection is particularly essential if you own a business or any form of commercial real estate. Even owning a home or driving a car can put your assets at risk in certain circumstances.
It is critical to take the proper steps to protect your assets from creditors long before you need that protection. If you wait until a problem arises, a court may view your subsequent asset protection maneuvers as an attempt to defraud potential judgment creditors and bypass the protections you tried to put into place.
Moving Assets to Legal Structures
Typically, the best asset protection planning involves a combination of strategies and the creation of legal entities to hold various assets that will:
- Safeguard your assets from liabilities and judgments;
- Avoid probate in each state where you own assets, thereby helping your heirs to prevent the anxiety, hassles, loss of control, loss of privacy, family arguments, court costs, and high legal fees associated with that court process;
- Reduce or eliminate estate taxes; and
- Ensure that behavioral problems and/or family dynamics do not jeopardize your wishes regarding any inheritance you want to leave to your heirs.
Many people believe that a revocable living trust protects their assets predatory action by creditors. This is not the case. A revocable trust serves many useful purposes, but asset protection is not one of them.
Structures to protect assets from judgments, estate taxes, and/or undesirable family interactions include family limited partnerships, limited liability companies (including traditional LLCs and series LLCs), irrevocable trusts (domestic or foreign), and offshore asset protection strategies.
Technically, assets you transfer to a legal entity are no longer owned by you, but you still may control those assets and benefit from their use. However, when you cease to own those resources, judgments and creditors cannot strip them from you easily if your business fails, you are sued for malpractice, or you run a red light and injure (or, worse yet, kill) someone.
Strategies to Make the Most of Texas Exemptions
Another component of your asset protection plan may involve ownership of certain assets that are protected by law including:
- Your family home (regardless of the value), including a maximum of 10 acres in the city and 100 acres of rural land
- Personal property (including vehicles) up to a value of $30,000 per individual and $60,000 per family
- Retirement accounts
- Life insurance proceeds
- College savings accounts
For example, cash could be used to pay down a mortgage or make improvements in the home. That moves the value of those vulnerable funds into a protected asset.
It also may be advisable to add an umbrella policy to your insurance portfolio and/or increase your liability coverage in other ways.
An Asset Protection Attorney Can Develop the Right Plan for Your Unique Needs
Everyone has different vulnerabilities and different types of assets requiring protection. A “one-size-fits all” approach to asset protection effectively operates as “one-size-fits-none.”
At Anderson Estate Planning, our team has extensive experience analyzing the needs of individuals, professionals, and families in a wide range of circumstances to develop the best plan to protect their assets from many different kinds of threats. We invite you to contact us for a confidential consultation to learn more about the ways we can help you plan for a protected future.