Protecting your hard-earned assets against creditors and lawsuits is essential regardless of your net worth. An asset protection attorney can reduce risk by using legal vehicles and strategies to shield you from potential claims and lawsuits. Some examples of these strategies include establishing an asset protection trust, investing in retirement accounts protected under federal law, and adequately titling your property.
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Establishing a Trust
A trust is a formal agreement that allows you to give the trustee control of your property. Until the end of your life or incapacity, the trustee maintains the assets on behalf of the beneficiaries, usually spouses or children. Building trust has many benefits, including lower tax liability, incapacity protection, and more. You can also set parameters for when and how assets are distributed. For instance, if your child needs to be more mature or financially savvy enough to handle a large inheritance, you can arrange for them to receive funds in increments over time instead of all at once. It can also protect your children from irresponsible spending by a third party or creditors. Trusts can also protect your privacy by avoiding public disclosure of the details of your estate. It differs from a will, which may be listed in public documents.
Investing in Retirement Accounts
Saving for retirement is one of the most important financial endeavors most people undertake. Building a nest egg that will last you for at least two decades requires effort, dedication, and regular investing. But that money can be lost to a lawsuit, bankruptcy, or other creditor actions if not protected adequately. A New York securities lawyer can assist you in structuring your investment accounts to protect assets from creditors. It will involve confidential personal and financial information, including family circumstances, business plans, tax considerations, and cash flow needs.
For instance, a domestic asset protection trust protects collected money from potential creditors so that you can ensure your loved ones receive your wealth with the least amount of taxes and without the stress of legal action or lawsuits. A self-directed individual retirement account (IRA) provides an additional choice. These allow investors to participate in a broader range of assets, such as securities offered through private placements, real estate, precious metals and other commodities, and digital currency assets. However, this type of investment comes with risks, including fraudulent schemes and volatile performance.
Every adult should have a will, but that alone does not guarantee that property will transfer to one’s wishes. How property is titled during a lifetime can affect how easy it is to access it, what rights the holder has, and, in some cases, even who they can give it to (it can disinherit family members). A security lawyer can help you appropriately title your property to ensure your assets pass to your loved ones. To do this, they will prepare lists of all accounts and their corresponding institutions, account numbers, type of asset, holder name, and any other relevant information. They will also comply with necessary paperwork requirements to ensure a smooth transfer at death or incapacity.
In addition, they can also assist with unique titling methods such as transfer on death or payable on death (TOD or POD). These methods transfer ownership to a beneficiary without having to go through probate and provide creditor protection from the debts of the deceased owner. It can benefit married couples with joint bank accounts or real estate.
Cybercrime and Identity Theft Insurance
With the rise of digitalization and the pervasiveness of technology, cybercrime is one of the fastest-growing areas of criminal activity. In addition to traditional burglary, cybercriminals can access your personal information to run up fraudulent credit card charges, ruin your credit score, or steal money from your bank accounts. They can also cause emotional distress and damage to your reputation. Unlike traditional burglary, where thieves need to take possession of your belongings to steal your belongings physically, cybercriminals can steal your information remotely through a computer. Hackers can illegally access hardware such as computers and secure computer systems using advanced hacking tools. They can also intercept electronic transmissions such as passwords or bank account information. They can even send viruses to infect devices and gather sensitive information through deceptive emails and messages such as phishing. To protect against this threat, you should get personal cyber insurance coverage. It can help cover costs like cyber extortion, ransomware support services, and data recovery. Some homeowners, condo, and renters insurance policies may offer this protection as a part of their premiums.
Strategic Asset Location
Strategic asset location is a tax-efficient method for managing an investor’s portfolio. It involves rebalancing a portfolio to place the highest-return investments in accounts that offer tax advantages and the lowest-return investments in funds that do not. A security lawyer can help clients develop and implement an asset location strategy to optimize their investments.
Asset locations can boost after-tax returns by maximizing the impact of investment income. Asset location can help reduce taxes by placing low-tax investments in taxable accounts and high-tax investments in retirement accounts. However, asset location strategies should not replace an investor’s overall asset allocation strategy. An asset allocation strategy should be based on an investor’s financial situation, risk tolerance, and investment horizon. A skilled financial professional can help determine the right mix of stocks and bonds for a client’s portfolio and then plan to position these assets across different accounts in the most tax-efficient manner.