If you have wealth, odds are you want to protect it. When you own a business or work in an industry where litigation is common, you could lose your wealth due to creditors or lawsuits. To protect your assets, you may want to consider one of several different estate planning tools, as an estate lawyer, like from Yee Law Group, can explain.
Here are some of the tools that you should consider when you need to protect your wealth and assets.
Create a Limited Liability Entity
To create a limited liability entity can separate your business assets from your assets. If you end up involved in a legal dispute, if your business and personal assets are not separate, then you could lose everything. With limited liability, if your business is sued or if you have creditors that come after your business, they will not be able to touch your personal assets and family wealth.
Establish an Asset Protection Trust
You can establish an asset protection trust domestically or offshore. If you establish an irrevocable trust, this is a powerful tool against creditors. While you may be able to grant the occasional distribution, it is normally up to a trustee what happens with the assets. Asset protection trusts are not good tax savings plans, however. In general, they should always be tax neutral. You do not receive many tax benefits from having an asset protection trust.
Transfer Assets to an Irrevocable Trust
When establishing a trust, you have the choice between an irrevocable trust and a revocable trust. The revocable trust does not protect your assets against creditors because you still have control of that wealth. When you put assets into an irrevocable trust, you are no longer the owner. Instead, the trust owns the assets. This makes these assets untouchable to creditors, even if you are a beneficiary of the trust. Keep in mind that you give up all control and cannot change it.
There are a lot of reasons why a person’s assets may end up compromised by creditors. For those who risk lawsuits in their business, preserving wealth may be important. After all, if someone sues your company or sues you due to business practices, you do not want to lose everything. This is why a lot of people keep their business and personal assets separate. A trust can help you to accomplish this. To find out more benefits of asset protection, contact and consult with an estate planning lawyer today.