There are several strategies you may employ to help protect your assets from a civil lawsuit. The catch is that you need to make a decision and begin using these strategies now before the lawsuit comes into play. In most cases, you cannot make changes to protect your assets if there is a lawsuit pending against you.
You work hard for what you earn. It is understandable that you would want to protect your assets if someone files suit against your business or you personally, or if you face bankruptcy, divorce, or other similar proceedings. While some people are at an increased risk because of their job, high assets, or other factors, it is impossible to predict whose estate might be in jeopardy because of a civil lawsuit.
For this reason, we recommend anyone with significant assets discuss an asset protection plan with an attorney.
Insuring Your Assets: A Basic First Step
Investing in an umbrella liability insurance policy is a good first step to protecting yourself against civil action.
The company who provides your homeowner’s insurance or auto insurance policy probably offers this type of add-on policy. It pays out to cover losses above and beyond what your normal policy might cover. It will only pay for injuries or other damages that occur on your personal property or because of an auto accident you caused, however. If someone files a suit against your business, but you have not taken additional action to protect your personal assets, they could be at-risk.
Ensuring Your Business Structure Does Not Leave Your Family Liable
If you run a business out of your home, are self-employed, or even operate a small business from another location, you need to consider protecting your personal assets from any business-related civil action.
One of the most common ways to do this is to incorporate as a limited-liability company (otherwise known as an LLC). This prevents someone who sues your company from going after your family’s assets, as well. It also offers some help in the event you need to file for bankruptcy on behalf of your business.
Protecting Your Assets with a Trust
Asset protection trusts are a type of irrevocable trust that can make it much more difficult for someone to gain access to your assets through civil litigation. However, it is imperative that you take note of two things:
An irrevocable trust can be costly to establish and maintain. Depending on the location and details of your trust, an asset protection trust could cost tens of thousands of dollars to establish. In addition, there will likely be other fees for maintaining and managing the account. Still, this is worth it if you have a significant amount of assets you hope to pass down to your children or grandchildren one day.
You Cannot Simply Take Your Money Back
An irrevocable trust is binding. With an irrevocable asset protection trust, you cannot decide you no longer want the trust and take your money back. The distributions you receive are managed by a trustee, who has discretion over when and how much you can withdraw.
This is the primary concern many people have about using this type of strategy to protect their money. While it is the safest option, it also gives them the least control over the assets they worked to earn.
Creating an Effective Asset Protection Plan
The estate planning attorneys at Bratton Law can help you understand the legitimate strategies available, and enact a plan to protect your estate from almost any type of civil action. We will sit down with you and your family and learn about your individual needs and concerns.
Taking your personal preferences into account, we can create a plan that protects as many assets as possible in the event someone files a lawsuit against you or you face other civil proceedings.
But remember, we cannot proceed if you have a lawsuit pending. For this reason, we recommend you begin this process well before there is even a threat of civil action.
Talk to a New Jersey Attorney About Your Options for Asset Protection
Bratton Law strives to treat every client as an individual, getting to know their priorities and preferences before we attempt to design a plan that meets their needs. By using a combination of asset protection tools and strategies, we can address all your concerns and protect as much of your estate as possible.
Call us at 856-857-6007 to set up a time to discuss your asset protection needs today.