Asset protection planning is taking proactive steps to protect your personal or business assets and income before there is a legitimate threat or claim against you or your business. This is not giving away or transferring your assets to other parties, that carries its own risks, nor hiding your assets, but organizing and compartmentalizing your assets in order to isolate and protect them from creditor claims. Some asset protection planning you can do include:
- Insurance. Liability, property, life, auto, business, E&D, D&O, cyber and other types of insurance should be considered and acquired to protect you and your assets in the event of a loss or lawsuit. Most policies also provide legal defense.
- Business Entities. Owning, operating and investing in a business through a corporation, LLC, limited partnership, trust or some other type of limited liability entity can protect your personal assets from claims arising from the business that do not involve your direct wrongful conduct.
- Tenancy by the Entirety. Owning your martial residence this way protects it from one spouse’s creditor claims during the marriage.
- Other States. Some states provide broader protection for homes and other personal assets, allow higher exemptions and offer other protections from creditors.
- Gifts and Transfers. Gifting or transferring assets away before a problem arises may protect them from your creditors, but it exposes them to the receiving party’s creditors.
- Protecting Gifts. A trust you fund for children or others should include spendthrift and other provisions to protect the beneficiaries’ interests from their creditor claims.
- Honesty. Ensure that all disclosures, applications, certifications, tax returns and other financial documents and statements are accurate, documented and defensible.
The attorneys of Brooks, Tarulis & Tibble, LLC can assist you in not only estate planning but asset protection planning as well, but both need to be done ahead of time in order to avoid claims of fraudulent transfers and without overly restricting or limiting your use of the income or assets thereafter. Should you have any questions, please contact us.
This Brief is designed to provide our friends and clients with information regarding the various subject matters covered, it is not designed to take place of legal, accounting, or other professional advice. If expert assistance is required, the services of a competent professional should be sought. This memorandum may constitute advertising under the rules regulating Illinois attorneys.
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