When you think about asset protection, you may envision some type of exotic arrangement like an off-shore trust in the Cook Islands. But there are many types of ordinary planning tools that provide asset protection for you and your family.

Take a moment to answer the following questions. If you answer “no” to any of the questions, there may be more you can do to protect your assets now and after you pass them to your children or other beneficiaries.

1. Liability Insurance
Do you have umbrella coverage in addition to your homeowner and auto liability policies?
If you have a teenage driver, is your insurance sufficient to cover the associated risks?
If you have a business, do you have a general liability insurance policy?
Insurance is an incredibly useful and often relatively inexpensive asset protection tool, specifically designed to transfer the risk of loss away from you and to the insurance company.

2. Business Entities
If you own a business, have you formed a business entity such as a limited liability company or a corporation?
One can obtain a significant amount of protection by conducting business through a corporation or other entity that limits liability.

3. Exempt Assets
Life insurance and retirement plans are assets that are generally exempt from lawsuits and other claims.
Have you maximized your benefits in these exempt assets?
Keep in mind that you can inadvertently undo this protection by making inappropriate beneficiary designations.

4. Testamentary Trust for Children/Other Beneficiaries
Does your Will give your assets to a trust that ensures the availability of trust income and principal for your beneficiaries, while protecting assets from the beneficiaries’ creditors and possible divorces?
Does your children’s estate planning protect their inheritance?

5. Marital or Cohabitation Agreement
Have you determined the character of your property, that is, is it separate or community property?
Have you considered the benefits of a prenuptial, postnuptial or cohabitation agreement?
These agreements can offer significant asset protection and will be discussed in detail in a future newsletter.

These are just a few examples of asset protection tools available.

Please feel free to call us with questions on any aspect of your planning.