You consider yourself to be savvy with money. After all, if you didn't know what you were doing, you wouldn't have accumulated the wealth you have—right? In addition to your high earnings, you are a smart investor and have planned for an early retirement. How confident are you, though, that your wealth is protected from potential threats like lawsuits and greedy ex-spouses? We take a look at the kinds of threats anyone can face and how smart estate planning can protect your assets from them.
Common Threats to Personal Assets
Some people are more vulnerable to losing their assets than others. First, you have to have assets that are worth going after. If your net worth is high, you can be sure that you will be targeted by lawyers representing people who think they have a claim on your wealth for one reason or another. Some of these reasons include the following:
- Divorce. No one gets married with the intention of getting divorced, but it can happen to anyone. If you come into the marriage with significant assets, you would be wise to take steps to protect them in the event of a divorce one day. If you eventually remarry but want to make sure your children from your previous marriage inherit, you will have to take intentional steps toward that goal with an estate planning attorney.
- Car accident. If you—or anyone else in your family—are ever declared to be at fault in a serious car accident, the victim could come after your personal assets in addition to your auto insurance liability coverage—especially if they have a good personal injury attorney.
- Professional malpractice. If you are a doctor or work in another litigious profession, your unprotected personal assets could be targeted in a malpractice lawsuit. This could also happen if you sit on the board of a company that produces goods or provides services.
- Premises liability. While people who own rental properties are at particular risk of being sued by someone who gets injured on their property, homeowners can also be sued by guests for slip and falls, swimming pool accidents, trampoline injuries, and dog bites. In most cases, insurance will cover the damages, but if you have significant personal assets, those could be targeted as well.
- Irresponsible dependents. A teenage or young adult son or daughter can cost their parents thousands of dollars if they cause someone else's injuries by driving drunk or recklessly or through other irresponsible behavior, such as hosting a party with drugs and alcohol in your home. Social media posts that attack the reputation of another person—which is not uncommon among young people—could lead to a costly lawsuit for libel.
As you can see, all the smart investments in the world will not protect your assets from these kinds of threats.
What Can You Do?
When you meet with an asset protection attorney, we will walk you through these kinds of scenarios and discuss the best way to protect your assets from each risk. A liability insurance umbrella policy will be essential for people in a certain wealth bracket. In some cases, establishing an irrevocable living trust might make sense. For clients who are landlords or own their own practice, setting up a limited liability company might provide the right kind of protection.
As with estate plans, a cookie-cutter solution will not provide the best protection for an individual. At Ross & Shoalmire, we create a custom solution for each client that addresses their risk and meets their goals. In today's litigious society, the threat of losing your accumulated wealth in a lawsuit should be a real fear. It's never too early to speak with an experienced asset protection attorney. With four offices throughout Northeast Texas and Southwest Arkansas, we are conveniently located for clients from Dallas to Little Rock. Call, start a chat, or fill out our contact form to get started today!