When considering asset protection planning there are many aspects and strategies to consider. Your decision should be based on your goals and lifestyle. The most basic planning strategies are rooted in transfer-based asset protection or transformational asset protection. Transfer-based planning involves transferring assets so that creditors are unable to reach it whereas transformational planning transforms an asset into an unattractive asset that a creditor can’t or won't want to get.
One of the most popular and the first of the three strategies is owning only exempt assets. Exempt assets are assets which are immune to creditor seizure by its nature- or automatically. There are more exempt assets than you think, both federally and domestically depending on your state. In Florida, for example, if you own the home that you live in, that home is protected from creditors unless your creditor holds a mortgage or lien on your home. This is known as your homestead protection. If your home is in an incorporated area, your residence includes a one half acre of land that is protected from a forced sale and up to 160 acres for unincorporated areas. What this means for your asset protection planning is that depending on where you live or where your assets are located, the exempt assets can vary and include significant personal assets. Some other exempt assets include annuities, life insurances, retirement accounts, and some personal property depending on where you are located. For a full list of exemptions look at our website - https://www.assetprotectionattorneys.com/domestic-asset-protection/list-of-states-for-financial-planning-exemptions/.
The next strategy to protect your asset is to title non-exempt or unprotected assets to more protective entities. This strategy is similar to owning exempt assets in that your assets are distributed into one or more protective entities that can’t be seized by creditors. The options for protective entities are numerous, including forms of co-ownership, irrevocable trust and COPE’s. There are also international protective entity options available as well. Your decision will depend on your lifestyle and goals.
The final strategy is to fully encumber or to equity strip your assets. This is done to decrease the value of your assets to your creditor by mortgaging your exposed assets and protecting the proceeds.
A fully integrated asset protection plan will often incorporate a variety of strategies into one plan, rather than just using one. You will find that utilizing a wide array of strategies to protect your assets will lead to the most effective outcome- a great asset protection plan. Make sure to consult your financial advisors before executing any plans. The Presser Law Firm can help by working with your financial advisor and tax advisor to get you started on a well-rounded estate plan for your future.
For more information on Asset Protection, contact The Presser Law Firm, P.A. for a complimentary preliminary consultation.
The Presser Law Firm, P.A.
6830 N. Federal Highway, Boca Raton FL 33487
(561) 953-1050 or e-mail Info@AssetProtectionAttorneys.com