Accruing wealth is just one part of establishing a strong financial strategy.
Once you have gathered wealth through business enterprises or valuable investments, it’s your job to keep that wealth secure, not just from market fluctuations, but also from lawsuits and other risks.
The key to this asset protection is to keep your money sheltered in a place where it cannot be easily accessed, but will hold or increase its value.
This way, in the event that you’re ever sued, the bulk of your assets will be off limits.
It’s an unfortunate truth that people with ample assets also attract the most litigious attention. This is doubly true of business owners and others who often deal with the public.
Additionally, asset protection will also protect you from creditors if you ever fall onto financial hard times. In these situations, protecting your assets is a crucial step to achieving financial safety and security.
Ideally, you’ll want multiple channels of asset protection. Diversifying will strengthen your financial safety. Trusts for personal property can provide a safe place for your wealth and protect it for future generations.
Establishing a business with the appropriate classification, such as an LLC, can allow you to keep your business assets separate from your personal property while minimizing your personal liability.
Insurance can also minimize the impact to your finances in the event of a lawsuit. Liability insurance, like an umbrella policy, provides you with financial assistance that will cover you in the event that you’re found liable for injuries or damages.
Such liability coverage is particularly valuable for businesspeople, especially those who are potentially likely to face legal trouble. Doctors come immediately to mind, thanks to the prevalence of malpractice suits, but property investors are frequently the target of litigation as well.
One form of asset protection that should not be overlooked is real estate.
Since real estate tends to gain in value over time, the money you invest in a property will remain steady or grow throughout the life of the investment.
When you need access to those funds, you can liquidate the investment by selling the property. Alternately, you can place the asset directly into a trust, business account or other safe place as you modify your financial strategy.
Asset protection can get complicated, but it doesn’t have to be.
Find a trusted CPA to discuss your options and work out a plan that will suit your individual needs. By combining real estate investments with other protections, you can protect your hard-earned wealth.
