There is a lot of misinformation floating around out there when it comes to asset protection. A lot of people who might consider creating an asset protection plan operate under some common misunderstandings that are spread by people who don’t have much experience with the process.
Anytime you have a legal question or need advice about asset protection, you need to speak to your estate planning lawyer right away. Until then, let’s take a look at some of the common mistakes people make because they don’t know enough about asset protection.
Mistake 1. You don’t have an asset protection plan because you don’t want to do anything illegal.
If there is one thing you should understand about asset protection, it’s this; asset protection is not illegal. A lot of people mistakenly confuse asset protection with tax evasion, money laundering, or other criminal activity.
When lawyers talk about asset protection, they’re not talking about illegal activity. Instead, they’re talking about matching your situation and your needs with the legally available options that can protect your assets in many situations. While you will not always be able to protect all of your assets, and you may not need to use more than a small number of asset protection strategies, the asset protection process is something that everyone can take advantage of without violating the law.
Mistake 2. You don’t need to start asset protection planning until a problem occurs.
Asset protection is all about taking your assets and shielding them from those who might seek to take them. This essentially boils down to anticipating the kinds of problems you might encounter in the future and structuring your assets so they are protected from potential lawsuits, creditors, or anyone else who might seek to legally seize them.
Because asset protection necessarily involves looking towards what might happen in the future, it’s always best to act now rather than later. If you wait to begin asset protection after you’ve been sued or have been pursued by creditors, you wont have many options.
Mistake 3. You haven’t recognized potential hazards.
No one likes the idea of getting sued or being pursued by creditors, but the reality is that these situations happen. Further, they most often happen to people who have significant assets.
Whether you are in a profession that involves a high potential risk of litigation, or are simply someone who has a high degree of wealth, you need to look at the potential risks objectively. Though the idea of being sued and losing a lawsuit is uncomfortable to consider, you must be able to realistically evaluate the possibility and take the appropriate asset protection steps that are necessary.