Asset protection is a key component in estate planning. Securing your assets from creditors and litigation will ensure that they are distributed to your intended beneficiaries even after you are gone. These strategies will also protect your assets from other situations like a divorce or even identity theft.
Since this concerns the financial security of your family, it is important that you work with our asset protection attorneys in Colorado to make sure that your asset protection plan is as well-built as possible.
How Does Asset Protection Work?
Many strategies are employed in order to build a robust asset protection system. You can use business entities, trusts, and partnerships for this purpose.
Here are a few of the sample strategies that can be leveraged for asset protection:
- State Exemptions – In Colorado, several necessities including the home equity, household goods, food, and clothing have different limited exemption amounts. Some miscellaneous items can also be exempted in the event of bankruptcy.
- Insurance – The goal is to maximize the scope of your policy to protect your assets. An umbrella policy can be a good start.
- Limited Liability Companies – Some corporate structures like LLCs offer excellent protection from creditors. You can also set up a family limited partnership or a family limited liability company.
- Trusts – As the value of your assets and your liabilities increase, trusts made for asset protection become more useful. They protect your assets from creditors, lawsuits, and judgments against your estate. They can also favorably affect settlement negotiations.
- Marriage – With careful planning, transferring assets between spouses can be a good asset protection strategy.
When Is it Ideal to Get Asset Protection?
In order for asset protection strategies to be effective, they should already be in place before threats such as claims or liabilities happen. After the fact, it can already be too late to begin any meaningful strategy to protect the assets.
The longer an asset protection plan is in place, the stronger it will likely become.
We advise to start asset protection while estate planning. Since you will already be carefully considering every asset under your name while doing the latter, it is an opportune time to also plan for their protection.
Our asset protection lawyers in Denver can help you with both these tasks at the same time.
Why Is Asset Protection Important?
In estate planning, asset protection is important because it guarantees the safety and ownership of your assets against risks. These assets can then be smoothly distributed depending on the preferences included in your other estate planning documents.
Asset protection offers other useful advantages that may not necessarily involve estate planning.
- Asset protection reduces the risk of being the target of a lawsuit. If you have a robust asset protection plan in place, it will be more difficult for creditors to see, let alone get access to your assets. This is an excellent deterrent for parties that want to sue you.
- Asset protection complements your liability insurance. Even with the most comprehensive insurance policies, there may still be some assets at risk under certain circumstances. With both asset protection and liability insurance in place, you will be more secure.
- Asset protection assigns liquid assets more securely. Assets that are liquid, such as money in your checking account, are more at risk compared to home equity, for example. With proper planning, you can categorize correctly and minimize exposure.
Choose Lewis & Matthews P.C.
Having years of experience in both estate planning and family law, we understand how important and urgent it is to protect your assets. We also understand how the legal system in Colorado works.
We employ strategies that keep you on the right side of the law while putting up robust measures to protect your assets.
- Using business entities like corporations, LPs, and LLCs – These entities are protected by the government’s limited liability laws. Individual owners are not held accountable for the debt of the organization.
- Using Asset Protection Trusts or APTs – These are often considered as the strongest method of protecting assets from creditors. A trust holds the assets of individuals who then become ‘beneficiaries who hold equitable interest.’ This protects the assets without breaching tax evasion laws.
- Transferring Rights of Properties – You may transfer an asset to a spouse, family member, or friend to secure it from claims. However, there is an inherent risk of not legally owning these assets in case a conflict arises in relationships.
We can help you determine the best strategies to employ to protect your assets. We can also tailor your asset protection strategies alongside your estate plan to ensure smoother transitions.
Book a consultation with us today to begin your asset protection.