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Be Safe, Not Sorry

Introduction

They say it’s better to be safe than sorry. When it comes to asset protection planning, this statement couldn’t be truer. Without proper planning, the assets you have worked tirelessly to build can be easy targets in a lawsuit.

At Riverview Capital, our wealth and business advisers recommend that our clients work with top notch attorneys to put an asset protection strategy in place.

Here are key points to consider when creating an asset protection plan:

• You and your advisors must know the rules in your state of residence. Every state has its own laws, and planning that may be useful and appropriate in one state might be totally forbidden in another.
• Asset protection planning cannot begin after you have a problem with creditors. If you move assets in an attempt to avoid existing creditors, you may be accused of “fraudulent transfers.” This cannot only undo all the protection you sought for your assets, it can leave you vulnerable to criminal charges.

Current Asset Protection You Most Likely Already Have

You may be surprised to hear that you’ve already taken some of the first steps in creating a strong asset protection plan. Qualified retirement plan money cannot be seized in a lawsuit; however inherited IRA’s are not included. In 2014, the Supreme Court ruled that funds from an inherited IRA are not considered retirement funds exempt from the debtor’s bankruptcy estate¹. This decision mainly affects non-spousal beneficiaries, since spouses are able to roll the funds into an IRA in their own name.

And you most likely have several insurance policies, another critical component of asset protection planning. Most of us know that we need life, disability and health insurance, since a catastrophic health event or premature death can wipe out even a wealthy family’s resources.

But successful people also need the best homeowners’, umbrella, and auto insurance policies. If it’s available in your line of work, top quality professional malpractice insurance is also essential. If the worst should happen, some or all of your obligation would be paid by your insurance company rather than draining your assets.

¹ Supreme Court case (B.C. Clark v. W.J. Rameker, SCt, 2014-1 USTC 50,317)