Houser Firm

Asset protection planning: What is it, and how does it work?

On Behalf of | Feb 16, 2023 | Estate Planning

When you work hard all your life to build wealth and create opportunities, it is only sensible to want to protect what belongs to you and leave a substantial inheritance for your loved ones. And this is where planning for your asset protection comes in.

But what exactly is asset protection planning?

In simple terms, asset protection planning is the process of organizing and protecting your assets from potential risks (like creditors, divorce and other claimants) that may arise down the road. Generally, this involves transferring ownership of certain assets and placing them under appropriate protection tools. Some of the assets you can cover under protection planning include real estate, stocks and bonds, business interests and family heirlooms.

Asset protection tools

Depending on the assets in question, the following tools might help you realize your asset protection goals:

  • Land trusts: Most Americans own some form of real estate. And since real estate investments are not protected from creditors, this means that they are at risk no matter where you are. A land trust, however, can act as a privacy shield for your property. That said, it is usually advisable to use the land trust alongside other protection tools like LLC.
  • Limited Liability Company (LLC): The LLC concept is one of the most popular real estate holding tools. You can also use it to protect investment portfolios. This way, should a creditor sue you, the law would prevent them from going after your interests in the LLC.

Like most Americans, you have probably worked hard all your life to accumulate wealth and build a legacy. Find out how you can protect your assets from potential risks.