Asset protection techniques include the steps an individual can take to avoid the potential loss of property when targeted by a lawsuit. These techniques can be important to understand for people living in a litigious state like California.
The foundation of asset protection planning is taking nonexempt assets that are subject to claim by creditors, and transferring them to exempt assets that are not allowed to be claimed by creditors. It is important to remember that any asset protection planning an individual does must happen before any evidence of a potential lawsuit. This is because the state enforces strong regulations against individuals who transfer assets to other people in a deliberate attempt to hinder the cause of a creditor. Individuals should also be sure to integrate their asset protection goals with the short- and long-term financial goals they identify for themselves.
Identifying one’s financial goals will clarify current and future income sources, the money needed by an individual to retire and the money that will be left to heirs after death. Estate planning goals will help answer questions like who will perform the duties of caretaker if the planner becomes incapacitated and who will manage the assets once the planner is deceased.
Once the financial and estate planning goals of an individual are fully integrated and assets are properly positioned to allow for protection from creditors, a solid asset protection plan is in place. The individuals who take these precautions will wield much more power of negotiation in the event of an incurred lawsuit and better avoid the risk of losing possessions for which they have worked many years to accumulate.
Proper estate planning will help protect the lifetime of work performed by an individual from creditors and allow heirs the advantage of this work in the event of the planner’s demise. The complexity of estate planning may be a little different from case to case, but an individual may benefit from the assistance of an attorney with experience in these matters.