Whatever your net worth may be, an asset protection plan helps you reduce risk and preserve as much of your wealth as possible. For small-business owners and highly compensated individuals, protecting your assets is even more important.
Surprisingly, according to a 2018 Bank of America study, more than 25 percent of high-net-worth individuals are not doing anything to protect their wealth.
Are you in that group?
You’ve worked hard to get where you are. If you don’t have an asset protection or estate plan in place, you’re unnecessarily exposed to legal risks and financial liability. You also have no assurance that your accumulated wealth will go where you intend it to or accomplish the goals you’ve envisioned it will.
An Asset Protection Plan Minimizes Risk
Every day, you face a variety of risks, all of which pose a threat to your asset portfolio.
You can insure around some risks, but should your liability exceed your insurance limits, your unprotected assets become fair game. You could lose your home, your business, your bank accounts and—possibly—your investments.
If you are a business owner, your risk may increase substantially, depending on your industry and the products or services you provide. The litigious nature of our culture, combined with growing anti-capitalism sentiments, puts successful business owners in the bullseye for potential lawsuits.
Asset Protection Planning Reduces Tax Liability
One of the most serious threats to your accumulated wealth is tax liability.
Capital gains taxes, estate taxes and other potential liabilities can substantially erode your accumulated wealth. Structuring your assets and estate to minimize the amount you have to pay the IRS and your state taxing authority is an effective way to protect your assets.
It is imperative that all tax-planning strategies comply with applicable laws and regulations. Otherwise, you will incur the scrutiny of the IRS and potentially set yourself up for stiff penalties and fines.
Protecting Your Assets for the Future
Whether you envision putting your accumulated wealth to work for the good of the world or transferring it to future generations — or both — asset protection ensures that your money ultimately ends up where you want it to be.
You can take steps to manage and preserve your wealth during your life, but if the bulk is lost to estate taxes upon your death, those efforts will have been in vain. For that reason, a comprehensive estate plan should be a critical component of your asset protection plan.
You cannot wait until a potential threat looms before implementing your asset protection plan. Otherwise, it may appear to the court that you were attempting to hide assets. Act now to ensure that you preserve as much of your accumulated wealth as possible.
For professional asset protection, tax and estate planning, call on the tax attorneys at Cantley Dietrich. As nationally recognized experts in our field, we also assist business owners and high-net-worth individuals with wills, trusts and complex estate matters.
Contact us today to learn more about how we can assist you with an asset protection plan.
NOTE: This article is for informational purposes only and should not be construed as providing legal advice. Use of this site does not create an attorney-client relationship. Contact an attorney to obtain legal advice.