Five Big Asset Protection Planning Mistakes—and How To Avoid Them
If you have substantial assets, you may be a target for frivolous lawsuits. That’s why it’s so important to consider asset protection strategies that can create barriers to protect your wealth. Asset protection planning employs legally accepted concepts and strategies, as well as specific financial products, to ensure a person’s wealth is not unjustly taken from him or her.
But asset protection can be a tricky business. Make the wrong move—knowingly or accidentally—and you can easily blow up the legal wall you’re trying to build around your wealth. Here are five major mistakes that we see commonly made when the affluent engage in asset protection efforts—and how to avoid them.
Mistake #1: Starting asset protection planning after you are aware you can be sued. While there are quite a few ways to protect your wealth, they tend to be ineffectual if they’re done too late. Move assets around after you are aware a claim can be made against you—into a trust, for example—and you’ll learn a new vocabulary term: fraudulent conveyance. That strategy will likely be reversed by the courts.
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Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.