Not Just for the Rich: 6 Basic Asset Protection Steps

  • Asset protection is going “mainstream” thanks to the wide range of inexpensive new tools and techniques.
  • Here are some of the ways people with businesses, property, ex-spouses, or other forms of legal exposure are repelling frivolous lawsuits without hiring a lawyer or spending a bloody fortune.
Decades ago, asset protection was seen by most as a “dodge” for deadbeats, shady operators, or the ultra-rich. Unfortunately, rampant lawsuits in America mean we have to take off those old-school blinders and deal with today’s realities. Simply put, honest people with assets are at greater risk of incurring a lawsuit than ever before – a consequence of so many of our fellow citizens being infected with a strong sense of entitlement.
That, combined with greedy out-of-control lawyers who make big bucks for suing at the drop of a hat, spells danger to you even if your assets are relatively modest. (In fact, relatively modest assets can seem attractive to a petty neighbor, because of a perception your insurance company will just “settle” to avoid the hassle.)
Not Just for the Rich Anymore:
Everyone Needs Asset Protection Now
It’s no wonder asset protection has become a respected, booming business. With tighter bankruptcy laws on the books and few signs frivolous lawsuits are being reined in, larger and larger numbers of real-estate investors, doctors, families, and business owners are seeking shelter from threats to their assets.
Even investment giants such as Charles Schwab have formed divisions which do nothing but sell increasingly in demand asset protection trusts. Independent Living News researchers have scoured the American financial scene for low-cost, easy-to-implement asset protection techniques.
Some of these basic tricks-of-the-trade include:
  • Dropping money into retirement accounts. Congress made them off-limits to most creditors and lawsuits.
  • A number of U.S. states are rivaling offshore havens with less-expensive trusts. Alaska, Delaware, Rhode Island, Nevada, and South Dakota are excellent starting points (and you don’t have to be a legal resident to set one up.) U.S.-based trusts cost about half the amount it takes to set them up abroad. While domestic trusts haven’t yet been fully tested by the courts, they are still a complicating factor to those pursuing frivolous lawsuits.
  • Umbrella insurance protects assets from personal injury and other claims by extending coverage beyond all the limits of your other insurance. And it’s dirt cheap because umbrella policies only kick in after the claims on your other insurance policies have been exhausted.
  • Be wary of putting gold, diamonds, cash, etc. in a personal safe deposit box at your bank. (Actually, we’re a bit wary of putting gold in a safe deposit box at all, for reasons detailed elsewhere.) Upon the death of the box’s holder, it automatically gets sealed for purposes of probate and tax liability review. Use a corporate safe deposit box instead – people die, but corporations with multiple trusted key holders don’t.
  • Take advantage of state exemptions from lawsuits and creditors. In states such as Florida and Texas you can sink your assets into building improvements or even pay off your home’s mortgage. Other protected assets include life insurance and retirement plans.
  • Equity stripping” involves loading up a property with debt to make it less attractive to legal predators. You could, for example, take out a loan against your vacation home and place the proceeds into an unattachable instrument, such as an insurance policy or annuity. (Don’t forget, you eventually have to pay that loan back!)
In today’s complicated legal and regulatory environment, common-sense asset protection is a fundamental building block of smart living. In the old days, asset protection may have been the purview of shady operators. Today, asset protection is necessary to protect you from those who flout common decency to steal using the crooked legal system.