Four Ways to Protect All Your Assets

Four Ways to Protect All Your Assets

by Richard S. Bernstein on Mar 30, 2018

Life Insurance

With the recent economic boom, many people are excited about new opportunities, but they may not be thinking about protecting the wealth they’ve already accumulated. Even in good economic times, lawsuits and equity grabs are big business, and if you aren’t protected, you’re jeopardizing everything you own. For the plaintiff, lawsuits are cheap and require little time investment. For the defendant, they often end with an innocent defendant settling out of court. If you have significant assets, you are especially exposed because people have a lot to gain from you.  Additionally, if you have events in your home, own rental property, drive a high-performance car, or own a company with a business partner, you are at an even higher risk.


Sadly, people often only think of how exposed they are after a lawsuit has been filed. Once you’re embroiled in a legal battle, it’s likely too late to guard your assets or interests. Below are four ways you can guard your assets and interests against creditors and predators.


1. Transfer exposed assets into exempt assets

One of the simplest ways to protect your assets is to transfer them from an exposed asset class to an asset class that is exempt from lawsuits. In Florida, some of your possessions are already exempt, like furniture and personal effects, but more valuable possessions, such as your primary residence and life insurance, are also exempt.  In most states, properly structured life insurance is resistant to or exempt from creditors and can be used for a variety of financial needs. Annuity and retirement accounts also receive protection in many states as well.


2. Use Protective entities

Placing one’s assets into protective entities such as an LLC, trust, etc. is a time old technique for a reason, as there are few ways that provide the same level of protection of your assets for you and your beneficiaries. When your assets are in a protective entity, you are in full control over your assets, but have no personal liability over them.


3. Fund a Buy-sell agreement

Rapid growth companies are subject to a myriad of challenges. One we’ve often seen is the lack of a well-funded buy-sell agreement by the owners of the company. A buy-sell agreement needs to be enforceable through liquidity, and if the liquidity isn’t available when called on, creditors or other entities could jeopardize a company’s ownership structure. Life insurance is the preferred way to fund a buy-sell agreement, as it provides liquidity when needed and preserves business resources for other applications.  


4. Review your annual protection plan annually

Reviewing your protection plan on an annual basis is just as important as creating the plan in the first place. This is valuable in two ways. One, to ensure that nothing you’ve acquired is exposed, but also to ensure you aren’t overprotected. Redundancy in a protection plan is a waste of resources and should be avoided.  

It’s always important to protect your interests, but in this day and age, people may not realize exactly how vulnerable they are or how much they have to lose. Meet with your advisors to ensure your plan adequately protects your assets.


Questions? Comments? Concerns? For a confidential consultation with one of our experienced advisors, call us at 561.689.1000.