When considering asset protection, you need to determine what assets you want to protect, and from whom those assets should be protected. Are you concerned about lawsuits or claims against your business? Are you trying to protect your children from potential divorce or bankruptcy in the future? Whatever your concern, it is important to include asset protection as part of your integrated estate plan. Decisions you make today can protect your hard-earned assets in the future.
There are several strategies to consider in protecting your assets: exempting your assets from creditor claims; limiting your liability through legal entities; and transferring your risk through insurance.
State and federal laws exempt some of your assets such as IRAs and life insurance from creditor claims. Learn what assets are exempt; then look into converting non-exempt assets into exempt assets.
Operating a business as a sole proprietorship doesn't protect the owner's personal assets should the business be sued. Also, those who invest in real estate for investment or rental purposes should consider a legal entity to minimize risk and protect assets.
Liability insurance is also an effective way to reduce risk and protect assets. Have you reviewed the details of your liability insurance policy lately? Maybe you should.
Then there's the self-settled asset protection trusts. Be glad you live in Tennessee, one of the few states known for having legislation that favors these trusts.