When many people think about the concept of estate planning, they often envision older people drafting wills. There’s more to this process, though. One crucial aspect is asset protection planning. It involves devising a strategy for ensuring that anyone who sues you can’t stake a claim to specific assets.
Asset protection planning can help you avoid losing it all
Many individuals don’t realize how everyday legal actions or disputes fall under the umbrella of lawsuits. If you cause a car crash and someone ends up with damaged property, or even worse, injured or dead, then they may sue you for damages. Your lender may also file a lawsuit against you to take back your home and recover any money you owe them as part of the foreclosure process. Asset protection planning can help you place limits on what a plaintiff can claim for oneself.
Other benefits associated with asset protection planning
Asset protection planning goes beyond protecting you from potential lawsuits. It allows you to develop a blueprint for achieving both short- and long-term financial goals. You may use it to plan for retirement or what would happen if you were to become mentally incapacitated down the road. It can also help you maintain eligibility for government welfare programs such as disability or Medicaid benefits.
Assets that creditors can’t stake a claim to
A few assets are generally out-of-reach to potential creditors, including almost anything that your limited liability company owns or that you place into a trust. You must place them there well in advance of any creditor filing a claim or a judge issuing a judgment against you, though.
Any eleventh-hour attempts to transfer your assets to someone else to avoid having creditors stake a claim to them is likely to be looked upon unfavorably by a judge. Doing so could put you at risk of being accused of fraud and result in a reversal of any transfers.
Dangers of not engaging in asset protection planning
There are two primary reasons why New Jersey residents don’t engage in estate or asset protection planning. They either don’t accept the realities that bad things can happen or think they have too little or that it’s too early to get started with this process. An attorney here in East Brunswick can explain why that’s not the case.