You worked hard to build your assets. Unfortunately, those with bigger assets often become targets for litigation. Even if you’re lucky enough to escape that, life can change quickly, and your assets could be at risk if they’re not properly protected.
For someone with high net worth, proper protection starts with a holistic plan created in connection with your legal, wealth management, and accounting advisors. These advisors work together to create a dedicated asset protection plan that incorporates the best tools and strategies to provide the protection your facts and circumstances require. Read below about four mistakes many people make when it comes to asset protection strategies and plans.
Mistake 1: Waiting to Create a Plan
You have a lot of tools at your disposal to protect your assets, but once there is a claim on those assets, it’snearly impossible to protect them legally. Trying to transfer them out of your name, hide them or otherwise omit them puts you at risk of violating laws against fraudulent transfer.
An old Army adage, “prior proper planning prevents poor performance,”is also true for estate planning and asset protection. Proactively taking steps to protect your assets reduces your risk of the slap-dash, last minute shenanigans people try once they’re on the defensive.
Mistake 2: Mixing Business & Personal Assets
If you own a business, it’s important that you don’t put your personal assets into the business entity, because it can open you up to legal challenges if you are ever sued. A simple analogy is to remember that your business is not your personal piggy bank. Cracking it open when you need money or sliding assets back into the business to cover payments is a really bad idea. Personal assets should be placed in the appropriate personal wealth protection vehicle (such as asset protection trusts or irrevocable trusts). As long as you properly create and fund the trust, many legal protections can keep your personal assets out of business disputes.
Mistake 3: Assuming Offshore Assets Are Safe
If you have some of your assets in offshore accounts, it’s still important to talk to an asset protection planning attorney about the best ways to protect them. Just because they are not in the U.S. doesn’t mean they can’t be targeted if you are ever named in a lawsuit or a personal dispute such as a divorce. Additionally, remember that offshore accounts and assets often have higher levels of reporting requirement and scrutiny such that failure to observe the proper formalities can compromise your costly protections.
Mistake 4: Trying to Hide Assets
When it comes to litigation, assume all your assets will be discovered, because they probably will. If you didn’t do the work beforehand to protect and preserve your assets, it’s not worth going to jail now trying to hide them. Assume that anyone who “used to be” your friend will disclose what you did to hide that asset and it will come back to hurt you in future litigation, where you could find yourself charged with other crimes such as perjury or fraud. Orange is not the new black, keep yourself out of jail and out of trouble by planning in advance.
The best thing you can do to protect your assets is contact Cantley Dietrich today. Our experienced attorneys can review your assets and help you find the right tools to legally protect you—and them—from many of the risks the future may hold.