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Why You Need to Worry about Asset Protection Planning

Updated: Oct 7, 2022

By Barbara Boone McGinnis, CELA

Many people I talk to believe that only the ultra-wealthy need an asset protection plan. Nothing could be farther from the truth. Everyone should be worrying about this. You. Your parents. Your adult children.

When you think about it, most people are concerned about asset protection. They just don’t think of it that way. For example, few people lay awake at night worrying about lawsuits and potential creditors. However, they may worry about what would happen to their assets in the case of a divorce, or how they can ensure that their legacy is protected once they are gone. This drives home the point that asset protection planning is typically just one component of a larger overall estate plan.

Asset protection isn’t just for celebrities and the mega-wealthy with real estate holdings around the world. Asset protection planning is for senior citizens preparing for the day they will need to go into a long-term care facility. It’s for young entrepreneurs seeking to protect their assets from the risks of their business ventures. It’s for retirees who want to preserve their assets for their children and grandchildren. It’s for cancer victims seeking to protect their home from mounting medical bills.

In today’s litigious environment, you should be concerned about the protection and preservation of your assets. The threat of creditors taking your assets is real and frightening, and the risk transcends all levels of personal wealth, from the very rich to the just-starting-out.

You need asset protection if:

  1. You are facing a lawsuit.

  2. You are in a profession with a high degree of liability, such as a doctor, lawyer, financial advisor, landlord, real estate developer, real estate investor, or similar role.

  3. You are a debtor and/or a guarantor.

  4. You face a potential tax or other government liability.

  5. You have accumulated, or are about to receive, significant wealth, such as an inheritance, investment windfall, or business success.

  6. The value of your home has been reduced to less than the amount of your mortgage.

  7. You are having trouble meeting your mortgage or other loan payments.

  8. You are concerned about losing your job or your business.

  9. You have excessive credit card or business debt.

  10. The value of your investment portfolio has fallen to the extent that your most valuable asset is your home.

  11. You are concerned about the financial viability of your business.

The only wrong time to consider guarding assets is at the last minute, after your assets are already in jeopardy. That could be because of a recently filed lawsuit, judgment, or divorce. It won’t do much good at that point.  To work, it must be done in advance.

People protect their assets for many reasons, but they share a common goal: to keep hard-earned wealth from greedy creditors, aggressive litigants, and others who would be all too happy to take what’s yours.

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