Today we offer part two of our series on protecting your assets in case you are sued. 

Many people mistakenly think that they don't make enough money to be a target for getting sued.  The reality is that this is simply not true.  

According to the CDC, 4.5 million people are bitten by dogs each year.  Although sometimes these are just harmless incidents, some have resulted in lawsuits resulting in multi-million dollar settlements.  General homeowner's insurance will usually cover $100,000 to $300,000 in liability.  The homeowner is responsible for any portion of the settlement above the limits of liability.

If you have a pool, you are also at risk.  In fact, a common misconception is that only wealthy families and people in high-risk professions need to have an asset protection plan. But in reality, anyone can be sued. A car accident, foreclosure, unpaid medical bills, or an injured tenant can result in a monetary judgment that will decimate your finances.

What Exactly Is Asset Protection Planning?

Asset protection planning is the use of legal structures and strategies to safeguard property that creditors might snatch away, by completely, or, at the very least, partially, protecting it from the creditor’s reach.

Unfortunately, this type of planning cannot be done as a quick fix for your existing legal problems. In fact, if you transfer assets to shield them from existing creditors, it could be considered a fraudulent transfer, resulting in legal penalties. Instead, you must put an asset protection plan in place before a lawsuit is imminent, let alone filed at the courthouse. So, now is the time to consider implementing one or more of these tips.

Below is the second of three tips that you can use right now to protect your assets from creditors, predators, and lawsuits.

Asset Protection Tip #2 – Maximize Contributions to Your 401(k) or IRA

Under federal law, tax-favored retirement accounts, including 401(k)s and IRAs (but excluding inherited IRAs), are protected from creditors in bankruptcy (with certain limitations). Therefore, maximizing contributions to your company’s 401(k) plan is not only a smart way to increase your retirement savings, but it will also safeguard the investments from creditors, predators, and lawsuits. On the other hand, if your company does not offer a 401(k) plan, then start investing in an IRA for the same reasons.

Contact Us for Help

If you are concerned about protecting your assets, we can help you. Click here to email us or call us at 309-807-2885 for your FREE 15-minute consultation regarding umbrella policy information to help protect your assets.