What Are the Best Ways To Protect Family Assets?

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(Newswire.net — February 13, 2023) — 

Strategies For Protecting Your Family’s Assets

Asset protection should be a priority regardless of your level of wealth, lifestyle, and savings. 

It’s not only millionaires whose wealth is vulnerable to risk and loss; even a family with a modest house and income needs to employ these strategies. 

Don’t wait until your financial security is threatened to act.

What is Wealth Protection?

Asset protection describes wealth management strategies and tools that enable individuals, families, and businesses in securing assets and future earning potential in the event of mishaps. 

For example, you can conserve the value of your cash savings against disability, illness, tax liabilities, long-term care, creditor claims, divorce, or premature death.

Why Do You Need Family Asset Protection?

No matter how good you are at investing your wealth, unexpected events can raise financial risk and losses. 

A proactive move like the protection of wealth puts you ahead in life as it minimizes the financial hit you will take. However, a holistic financial plan is only complete with strategies to handle unfortunate and unexpected costs. 

Wealth protection strategies enable you to quantify your risk and mitigate the effects.

5 Most Common Family Asset Conservation Strategies for Your Wealth 

When protecting assets consider the structure of your family and your investment profile before picking a way forward. 

The following 5 methods top our list of recommendations for wealth conservation: 

Insurance Coverage

Insurance, a popular choice, is the ideal first line of defense for your fortune. Things like health, auto, personal liability, and homeowners insurance are essential. Insurance makes your assets protected from lawsuit costs. 

Consider a situation where you are sued; your liability insurance provider can hire you a lawyer and cover the legal fees as well, whatever the lawsuit’s outcome. It’s also important to get what is known as an umbrella policy, as it covers the costs that remain after your insurance policy is maxed out.

Asset Protection Trusts

When you hear the term trusts, you are likely to think of offshore trusts. However, in addition to those, there are also domestic ones that are less costly to establish and maintain. For example, you can establish an ATP in states like Utah, Nevada, Delaware, Rhode Island, Ohio, and South Dakota, even if you don’t live there.

ATPs are irrevocable and run by an independent trustee. These trusts can be used to keep your assets, which in turn helps protect assets from creditors as they are no longer in your name. As a beneficiary of the ATP, you and your family will receive distributions periodically. 

There are, however, a few legalities to how trusts for protecting your assets work that you must be aware of to avoid tax issues. For instance: The appointed trustee must reside, be located, or be licensed in that state, a portion of the trust’s wealth must be held in that particular state, and the trust must have a spendthrift clause. Without meeting these requirements, your fortune may still be at the mercy of fines and interests from the IRS.

Limited Liability Entities

Establishing limited liability companies (LLCs) is another method for personal asset protection against liability from your business activities. That means creditors and litigation parties cannot go after your personal wealth. 

Additionally, you can protect wealth from your other businesses from liability arising from any of your other economic activities.

Statutory Exemptions

Certain federal and state laws can be leveraged as part of your preservation strategy. 

By identifying laws that make certain resources exempt from creditor claims and judgments, you can structure your investments to take advantage of such privileges in your state. 

Notable exemptions in most states include retirement plans e.g 401ks and IRAs, and homestead exemptions. Although this method doesn’t completely cover you from liability, it does reduce your exposure to liability by a margin.

Estate Planning

Proper estate planning is also essential in preserving your inheritance for your children. 

You can use instruments like a protecting assets trust for that. Other strategies like tax planning can also be utilized to augment your estate planning efforts for protecting family assets against huge losses to inheritance tax.

Summing Up

Asset conservation planning and management services help you take steps aligned with your family structure and investment profile, be it the type of insurance or type of entity that you can create to safeguard your wealth. It allows you to avoid bankruptcy from litigation by shielding personal wealth to protect your estate.

An asset protection advisor like Interactive Wealth Advisors helps optimize your approach to preserving family wealth as you transition through life. We specialize in providing objective financial planning to help clients build, manage, grow, and conserve their resources through life’s transitions. Our team can help find the best way to protect assets, including legacy financial planning and tax planning in Portland, OR. Get in touch for financial planning services options.