The legal strategies, concepts, and techniques involved in the process of protecting an individual’s estate is known as asset protection. The main goal of this major element of financial planning is to insulate a person’s properties and funds from creditors and their claims without any sort of tax evasion or perjury. Businesses, as well as individuals, utilize asset protection strategies to limit the access of unwanted creditors to specific valuable estate assets while functioning within the limits of debtor-creditor law.
There are certain factors that are taken into consideration for every asset protection case; the identity of the individual engaging in such planning, the nature of the claim, the creditor’s identity, and the nature of the properties. Some common asset protection methods include family limited partnerships, asset protection trusts, and account-receivable financing.
Many asset protection processes include trust agreements. Individuals engaging in such plans are required to surrender some beneficial control over a certain asset in exchange for receiving protection of their assets against creditors. Another type of asset protection is to use the legalized or corporate form of the entity or asset. Additionally, there is one more type of asset protection which involves placing assets in a tenancy by entirety when the individual engaging in asset protection planning has a spouse.
Furthermore, it is not mandatory for protection plans to involve complex asset structures. The process can sometimes be as simple as signing up for the right kind of insurance. In the unfortunate even of a lawsuit, there are specialized regulations and policies that can allow individuals to protect their valuable assets. However, insurance in by no means a foolproof method and it can’t eliminate all risks involved.
Continue reading to get extensive knowledge about asset protection and take a step towards optimizing your legal processes.
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