Typically, many people, especially in the middle class, believe that asset protection is only for the wealthy.
They have this misconception that if you don’t belong to the rich class, you don’t need to protect your assets for anything terrible that may happen.
Unfortunately, this wrong belief can cause a lot of damage to anyone who has assets. If you have assets even if they’re not much liquid, you may still be entitled to asset protection planning.
If you wish to protect yourself and your family from a potential risk of financial loss, here are the three reasons why asset protection isn’t just for the wealthy people:
What Is Asset Protection?
Primarily, asset protection refers to a strategy that allows any person to protect their assets from lawsuits, claims of creditors, and other unfortunate circumstances, such as bankruptcy, divorce claims, and many more. It consists of several techniques intended to stop other people’s ability to seize your assets and safeguard them for your family’s financial future. These can include, but not limited to:
- LLC (Limited Liability Company) – If you have a company, you can set it up as LLC to keep your creditors from running after your personal assets for the liabilities of the company. In other words, the creditors cannot obligate you to make payments from your LLC.
- Trust – This is one of the most powerful asset protection tools you can try. Setting up a trust means placing your property under the control of the trustee for the benefit of the beneficiary. It’s protected from lawsuits because it has a distinct and separate identity from you, who is the beneficial owner of the assets. Also, creating a trust can help reduce inheritance tax, thereby increasing your beneficiary’s total amount of inheritance.
Depending on your circumstances, you can use these methods to protect anything that you have for the next generation. However, you’ll need the assistance of a dedicated asset protection lawyer from law firms, like Mile High Estate Planning. They can help with the planning process by providing you with valuable legal advice.
Why Is Asset Protection Available To Everybody?
Now that you’re aware of what asset protection is, it’s time to understand the reasons why this process isn’t just for the wealthy. As mentioned, asset protection is for anyone who wants to preserve their ability to leave a legacy and secure their family’s financial future.
Below are the three reasons why you should consider asset protection even if you’re not rich:
Spending Time In A Nursing Home When You Reach 65 Years Old And Above
When you reach the age of 65 years old and above, you’ll have a higher chance of getting yourself admitted to a nursing home. Hence, if you’re a middle-class earner in your early ages, you need to take the costs of nursing home care into account. Generally, getting the benefits of nursing home care can cost you thousands of dollars each month.
Unfortunately, even if you have Medicare or private insurance coverage, these don’t cover the costs of being in a nursing home. As a result, your family have no choice but to take out money from their pockets to cover the expenses required by nursing home care. This setup, on the other hand, can drain you financially, thereby leaving no assets to your family when you die.
This is where asset protection becomes beneficial. With the help of a lawyer, you can make use of different wealth protection strategies to ensure your assets are protected against the costs of nursing home care.
Administration Of Assets In Case Of Incapacity
Indeed, life is full of uncertainties. Dealing with unfortunate life events doesn’t only happen to wealthy people. For example, whether you’re rich, poor, or in the middle, you can possibly become incapacitated tomorrow, next week, next month, or next year.
So, it’s important to plan how you’re going to manage your assets even if you’re not wealthy. This is especially true if you may become incapacitated a few years from now. When you’re incapacitated, you can’t administer your assets properly, leaving your loved ones with the responsibility of managing your wealth on your behalf.
Unfortunately, this situation can cause a lot of trouble within the family. Each of the family members may fight over managing your assets which creates conflicts among them. Therefore, even if you’re not wealthy enough, protecting your assets is the best way you can do to avoid chaos in the family. After all, doing asset protection planning means designating a particular person who will manage and shield your properties against any threats.
Administration Of Assets In Case Of Death
Aside from incapacity, death is indispensable to all classes of people. Whether you’re wealthy or not, you’ll inevitably face death. This is one of the reasons why asset protection isn’t only intended for rich people.
For instance, when you die, your assets will be transferred to your family. But, if you have no asset protection plan in place, the transfer has to go through a probate proceeding, which may take a long time. Moreover, not having an asset protection plan makes it easy for creditors and judgment holders to seize your properties upon your death.
Therefore, even if you’re not rich, you still need asset protection planning to make sure you leave a legacy right after your death.
Closing Words
Indeed, being wealthy isn’t the only reason why you should learn the rules on asset protection planning and get started with the process. Regardless of your income level, you should think about what you can do to safeguard your assets against any potential threat to your family’s financial future.
So, if you have some assets to protect, even if they’re small or big, keep these points in mind to help you understand that asset protection is for everyone seeking to secure their family’s financial future.
