Protecting Your Assets

We all work hard to attain and maintain our financial assets, whether it is our home, our vehicles, our savings or retirement plans. With many different life scenarios, these assets we have worked so hard for, can be lost quickly due to divorce, illness or financial difficulties.

You can find out about a number of legal methods to shield your assets with the help of good legal counsel. Since state laws are complicated on this subject, the assistance of a good lawyer is a necessity.

One method of asset protection is a real transfer, in which you sell or give property to other people. There must be a valid reason for it and the transfer must be done long before a creditor makes a claim.

Transfer of property between spouses can give some asset protection. The laws and degree of protection vary from state to state so make sure you are familiar with your state’s legal status on this issue.

For businesses, incorporation can provide more asset protection. In this situation, all financial records of the corporation are maintained separately from the owner’s.

“Spendthrift” trusts are another mode of asset protection. With this method, the beneficiary is unable to reach the assets. The same principle therefore applies to the creditors.

Certain types of retirement plans cannot be reached by creditors. An ERISA Qualified Retirement Plan or a KEOGH cannot be reached by either an employer’s or an individual’s creditors. IRA accounts protection from creditors varies again from state to state. So check which laws apply in your individual location.

After working so hard to acquire our homes and other assets, it’s worth investigating the best way to protect them for our unique life situation.