It takes years of hard work and dedication to create your wealth, but only a few months of debt litigation to lose almost everything. You never know what the following day throws at you. It can be a divorce lawsuit or debt collection, which can ruin your financial freedom and status.
Fortunately, you can protect your assets against unfortunate life incidences. Whether you’re a high-net-worth individual or a regular job holder, safeguarding future financial stability sounds like a prudent life decision. You can do this through asset protection and estate planning.
Let’s look into five asset protection strategies. We’ll also give in-depth insight into safeguarding your financial resources for the next generation.
1. Protect Your Assets Through Trusts
Trusts make one of the most reliable estate planning and wealth preservation strategies. It’s a go-to financial planning strategy for individuals who want to protect their estate against lawsuits and creditors.
This estate planning strategy works by transferring your assets to a trustee. You have two options for trusts – domestic and foreign.
2. Separate Personal and Business Assets
Keeping the same accounts for business and personal expenses is risky. A lawsuit facing your business could expose your home and other assets to avoidable auctions. You can make a business shield by adopting a limited liability company structure.
Also, go for separate personal and business credit cards. All these are asset protection strategies in case your business faces unending lawsuits.
3. Leverage Multiple Legal Tools
Real estate experts will advise against owning multiple properties under your name. Why? In case someone sues you, you risk losing all of them in a single court decision. You would want to own different properties under a separate LLC.
Besides asset protecting, leveraging multiple tools also means you can avoid foreclosure. Reach out to BrothersBuyHomes.com and learn more about selling your property to avoid foreclosure.
4. Take Umbrella Insurance Cover
It’s okay to have various insurance policy covers that protect your various investments. It can be life insurance or homeowners policy. However, you can also go for umbrella insurance to cover all your other policies, including business.
Umbrella insurance cover goes for about $300 to $500 per year. It gives a coverage of up to $2 million but doesn’t guarantee maximum protection. Also, the insurance company will likely not pay for fraudulent actions.
5. Adjust Your Debt-to-Income Ratio
While it’s not advisable to live with a high debt ceiling, raising your debt to income ratio can be a good strategy for asset protection. Raising this ratio discourages creditors from claiming your assets in case of debt litigations.
Additionally, investing in assets by debt makes your equity insignificant.
You would also prefer to use debts on property purchases to reduce the tax liabilities. However, debt asset protection only works if you’re strategic about it.
Make the Decision to Preserve Your Wealth for Generations
When it comes to asset protection and wealth preservation, taking measures before unforeseeable life incidents is the best plan. Besides, you’ll likely experience low stress levels if you protect your assets using the above strategies.
The secret is starting as soon as now because tomorrow might come with surprises. Check out other expert articles on our site for in-depth insights into financial planning and asset protection.