It is estimated that the US courts receive over 40 million lawsuits every year.
We have seen many people face lawsuits and pay millions of dollars in damages. This doesn’t mean that they didn’t have an asset protection plan in place – it is just that they didn’t make it airtight.
While mistakes happen, you need to be careful not to make silly mistakes that put your assets in jeopardy. Let us look at the top mistakes that you can make and how to avoid them altogether.
Putting All Your Assets in Joint Ownership
Never opt for joint ownership unless you have all the reasons in this world to do so. When you put your assets in joint ownership, you subject them to double risk – creditors will have a field day because they can attach assets that you jointly own.Spend some time with an asset protection attorney so that you can learn the different types of ownerships and their demerits.Having a Co-signer on Your Bank Account
Don’t put a co-signer on your bank account. If the bank treats another person as a co-signer to your bank account, then your funds get exposed to their creditors.
Many people trust their family members so much that they allow them to hold a bank account with their savings jointly. When something happens, they realize that their funds have been attached for clearing debts they never knew about.
If there is a need to sign checks on your account, then ask your asset protection lawyer if you can assign a power of attorney to do this for you, or a trustee.
Not using a Corporation or LLC
If you decide to work as a sole proprietor, then apply to get taxed as an S corporation or set up a LLC to run the business. When you set up the corporation or LLC, make sure you follow the rules that control them, so that you don’t treat your business checkbook as a personal expense account.
You Don’t have a Detailed Review of the Ownership of the Assets
One of the mistakes that many people make is failing to change the ownership of a property. Make sure you understand all the types of ownership available on the assets and know what happens when you are faced with a lawsuit. For instance, assets that you own jointly pass outside the will and are not subject to probate.
Lack of an Estate Plan
An estate plan allows you to secure your assets for the future of your family, and make sure the assets are inherited the right way. Make sure you have an estate plan in place and integrate it with your asset protection plan so that you do everything right.
Lack of a Risk Management Strategy in place
As a person, your life is fraught with risks at every corner and every opportunity. You need to come up with a list of risks, and then decide how much you can pay for insuring your assets against these risks.
Implementing Asset Protection in a Vacuum
Talk to an asset protection lawyer and they will tell you that you need to integrate our asset protection plan with other strategies such as investment, tax, and insurance plan. Don’t leave out the estate plan as well as the business plan.
Relying entirely on One Advisor
You need to work with professionals to help you come up with an asset protection strategy for your estate. If you are new in town, get referrals from a competent asset protection lawyer.
Don’t jump on board the first professional you come across; instead, try and interview at least four prospects before choosing the right one.
Additionally, once you get the best professional, don’t let your guard down and give them total control of the assets unless you can afford to lose the assets.
Respect Legal Controls
You need to make sure everything you do towards asset protection is within the legal framework of New York. Talk to your lawyer to understand what laws drive the process, and make sure you follow the rules to the latter. If you ignore these protocols and do things on your own, the court will ignore any entities you have set up and might rule in favor of the plaintiff at all times.
Protect Your Assets Better. Today.
You will come across many processes when coming up with an asset protection plan. The need to do things right goes beyond what you desire to achieve. Try to avoid common mistakes that might make the process null and void. In all you do, work with an asset protection lawyer to make sure you are within the law.
