Asset protection for a high-net-worth individual or a business is an essential part of any wealth-protection strategy. According to a review by Harvard Law School, the U.S. far outpaces other developed countries in the number of suits filed per 100,000 people, with 57% more than the next-closest country (United Kingdom).
Many of these lawsuits are considered “frivolous” and are thrown out before they reach a judgment, but millions still make it through the courts. For that reason, it’s important that you have a personal asset protection strategy to avoid losing what’s important to you in the event of a lawsuit.
The Most Common Threats to Assets
Your assets could be threatened by almost anything, but the most common reasons someone brings a lawsuit include (in no particular order):
- Vehicle accidents
- Personal injury
- Partner or business disputes
- Missed financial obligations
- Professional malpractice
- Harassment at your business
- Accidents on your business property
- Vehicle accidents involving company vehicles
An asset protection strategy is like a sliding scale of protection. How much and how deeply you care to restrict a judgment creditor’s ability to take something changes how you protect the assets. A judgement creditor is that person who, if any of those things (above) happen to you, is the someone who files a lawsuit against you or your business and then pursues your personal wealth or assets—such as your home or personal bank account. Along that scale of protections are strategies to protect your wealth from lawsuits filed against you personally.
Why Insurance Isn’t Enough
Many businesses and individuals believe that having liability insurance is enough to protect you if these things occur, but that is often not the case. We often see lawsuits arise out of that one “terrible, horrible, no good very bad day[GD1] ” where the insurance payment draws from an old account and the policy refuses to pay on the same day there’s an accident. Don’t laugh, it happens. It’s imperative to have good insurance, but damages sought in many lawsuits often surpass insurance limits, and insurance companies have a reputation that they will do whatever they can to avoid paying a claim.
Get the Protection You Need
There are myriad legal ways to protect your assets from litigation or creditors, but they are regulated by state, federal and international laws. The important thing is to be proactive in setting up these protections. If you wait until after a lawsuit is filed, it’s often too late. The old Army saying, “Prior proper planning prevents poor performance,” is never truer than in recognizing the value in protecting yourself before problems arise.
At Cantley Dietrich, our advisors have a deep understanding of federal, many state, and international laws that can protect your assets. Everyone has unique facts and circumstances, risk tolerances, and worries, and every plan is designed specifically for your unique situation. Our ultimate goal is to educate you on where to expect risk, how you can reduce risk, and provide opportunities to safeguard your family and wealth in the event of the unexpected. We also know that asset levels and laws change over time, so we can work with you to conduct regular checkups on your strategies to help ensure everything remains protected.
It’s a smart approach with a focus on privacy and security for our high-net-worth clients. Talk to Cantley Dietrich today about how we can help you.