[ad_1]
Asset protection strategies involve protecting money and property from creditors, taxes, and lawsuits. Strategies include retirement plans, trusts, and corporate entities. Attorneys use a combination of methods to help clients protect income, and strategies vary by jurisdiction. Retirement plans and irrevocable trusts can protect assets from lawsuits, while corporate entities like LLCs protect personal assets from liability.
Asset protection strategies are methods of protecting money and various types of property from creditors, taxes and lawsuits. Different strategies include setting up retirement plans, trusts, and corporate entities. Attorneys and other professionals specializing in estate planning, tax law, and asset protection strategies use a combination of methods to help clients protect income. Asset protection strategies vary according to the laws of each jurisdiction.
Attorneys who develop asset protection strategies sometimes use retirement plans to protect assets. In the United States, for example, the law protects specific types of retirement plans from lawsuits, meaning a court cannot compel a person to withdraw money from a retirement plan to pay a judgment. The plans that may qualify are IRA or retirement plans and 401(k) plans. These plans are often available through the client’s employer. An employee pays a certain percentage of his salary into an interest-earning plan, and his employer often matches the contribution.
Asset protection strategies often include tools of trust. A trust is a legal entity that holds assets for the benefit of one or more people called beneficiaries. A person called a settlor places her assets in a trust with specific instructions to a trustee. A trustee is an individual, bank or company that manages the money held in the trust. A trustee must manage assets in accordance with the instructions of the settlor.
Only certain types of trust tools can function as effective tools in asset protection strategies. For example, in an irrevocable trust, the laws prohibit anyone from removing the assets deposited in the trust. This means that a court cannot order the settlor or trustee to hand over assets to pay a judgment. There are various types of trust instruments and each works differently based on the jurisdiction. Therefore, it is important to consult an attorney experienced in asset protection strategies and tools of trust.
Strategies for asset protection may also involve a corporate entity such as a corporation, limited partnership, or limited liability company (LLC) to protect assets. A structure like an LLC allows someone to conduct a business while protecting their personal assets from liability. Of course, another person or business can sue a business entity and obtain a judgment against that entity. LLC members or corporate officers, however, are usually not responsible for paying a judgment personally. The law can only reach the personal assets of owners in very limited and rare circumstances.
Smart Asset.
[ad_2]