To determine what type and form of Asset Protection you will need, it is critical to first understand your full asset picture. The Asset Inventory is simple. List all of your assets beginning with your primary residence, second home, office building, rental property, and then moving to investment assets such as stocks, bonds, mutual funds, cash, retirement accounts, insurance policies and even your art, collectibles and jewelry. List everything as you will need it in Step #2. Be sure to also list the Fair Market Value of the assets as well as any debt, mortgages or obligations associated with each one.
Determine What's Already Protected and What's not
Once you have all of your assets listed in Step #1, you will want to determine which of your assets are already protected and which are not. This will vary from state to state. In most cases your Homestead Exemption will protect some portion of your home equity. If you happen to live in Florida or Texas, then it will actually protect ALL of your home equity. Also your IRA. 401K and other qualified plans are generally considered protected as well. Your other real estate if it is not already in an Asset Protection vehicle is likely NOT protected. This will also be true for all of your investments such as stocks, bonds, mutual funds, collectibles, art and jewelry. This step takes a bit of expertise and should be done with the assistance of an expert who understands all the variables of your asset mix, as well as the applicable State and Federal laws and rules.
Assess the Vulnerability of Your Unprotected Assets
Now that you know which assets you have are protected and which are not, you should determine how "at risk" you and those assets are. This also should be done with the help of an expert. Consideration would include the type and use of each asset, as well as the value. The Rule is "The higher the Value, the more At Risk the Asset is!" We also want to look at your personal risk factors. For example, if you are a doctor, have employees, run a business or engage in any other "high-risk" type of business or activities, then you are more likely to need Asset Protection.
Take Steps to Protect your Vulnerable Assets
Once you have considered the value of the asset as well as the risk, you will want to take the final step of Protecting Your "at risk" Assets. This will involve determining which legal tools and strategies are most appropriate for your situation. These may include tools like a Family Limited Partnership, Limited Liability Company, and an Asset Protection Trust. For this step it is absolutely critical that you have qualified and expert counsel and assistance. This area of law is very specialized and you should look for an attorney who has deep client experience and expertise. Do not feel limited to an attorney in your area. In many cases the best choice may not be local to you, and often this is actually a real benefit. It makes it that much more difficult for someone trying to reach your assets when your planning, and your attorney, are not around the corner.