Do you need an asset protection strategy in San Diego, California? What is an “Asset Protection Strategy” and who should make sure to have an asset protection strategy in place?
What is an Asset Protection Strategy?
An asset protection strategy is a custom-tailored process to protect the assets you’ve worked so hard (often a lifetime) to develop and build. The purpose of a comprehensive asset protection strategy is to shield yourself and your assets from the claims of creditors, judgments, lawsuits, seizure, unwelcome claims by “heirs” or “beneficiaries” and even bankruptcy.
Effective estate planning and the implementation of entities and other legal structures such as revocable trusts and irrevocable trusts provide a shield for your personal or business assets. In many cases, it is also possible to reduce the impact of taxation associated with the asset(s).
Who Should Consider an Asset Protection Strategy?
Those who need an asset protection strategy include homeowners, business owners and licensed professionals as well as high income / high net worth individuals and spouses. This is a substantial issue for those in high risk occupations such as “doctors and real estate developers as well as wealthy individuals (who are) targets for creditors due to their net worth” noted the American Bar Association.
It is not only prudent to protect your company, your property, your money and other assets and yourself in this highly litigious environment, but this valuable process also provides the assurance your intentions will be followed in the event of unexpected illness or loss of life.
Take a few moments to ask yourself a few questions:
Do you own a home? How much equity exists in your residence? The median value of a San Diego single family house today is $939,100. Most 3 bedroom properties are well above $1 million. The majority of San Diego homeowners have at least hundreds of thousands if not millions of dollars in equity that is at risk simply by owning that home.
If you own your home, do you have a dog? A swimming pool? A California pet owner is “strictly liable” for the actions of their pet(s). A personal injury attorney is only required to prove you own the pet in order to obtain a substantial financial judgment for any injury associated with your pet(s), even if they were simply startled or lost their composure for a moment or two. Homeowners have substantial legal and financial exposure if anyone (invited or uninvited) is injured in or around your home, including your swimming pool or anywhere on your property.
Do you own rental property? Did you know that you can be held liable for the actions of your tenants?Did you hear about the judge’s widow who was sued when a tenant caused an explosion in their rental property while making meth?
Landlords are exposed to genuine, substantial legal and financial risk. California Attorney General Rob Bonta just achieved a $3.7 million settlement with a corporate landlord. In his remarks, the AG noted “landlords need to be diligent in ensuring that they abide by (California) laws.” Landlords are sued every day here in California, for far too many reasons to list here. How can you best protect the equity in your rental property?
Are you a business owner? Think of all the risks you’ve assumed and the hard work and money you’ve invested in your business over the years. All business owners need an asset protection strategy. This is especially true if you are in business and/or doing business with others.
Corporate entities provide specific levels of protection for you and your assets, but how safe are you, really?
- Do you have your own business that is unincorporated, i.e., a sole proprietorship?
- Are you in a partnership with another party that is not an LLC or corporation?
- Do you have joint bank accounts with others?
- Does an employee use their own automobile while at work or for your business purposes?
Do you fully realize the extent of the risks you face due to others associated with your business efforts? Here in California, you can be liable for the actions of a business partner, whether or not you knew or were even aware of what they were doing. Did you know that if your partner is sued and your interests are not properly structured, all your personal assets could be at risk in a lawsuit? Have you considered the liability you bear for injuries and/or damages associated with any accident involving an employee using their own vehicle while at work or for your business purposes?
Do you share a jointly held account with anyone who isn’t your spouse? Your interests are immediately at risk in the event that the joint account holder files for divorce, has a tax levy or lien or becomes liable for the judgment resulting from any creditor or lawsuit. I’ve lost count of the number of times we’ve taken a call or provided counsel to a business professional surprised by the fact that their partner just withdrew all of the cash in the partnership account.
If You Have Equity or Assets You Need an Asset Protection Strategy
Life is naturally full of risk as well as unexpected challenges. If you have equity or assets you need an asset protection strategy to shield all you’ve worked so hard to build and to minimize the impact of taxation.
There are many inter-related elements in an effective asset protection strategy. They work in concert to protect you, your money and the fruits of all of your hard work from creditors, lawsuits, liens and levies.
Limit your liability and exposure through entities, legal structures and appropriate insurance to offset risk. Formalize informal business relationships and unincorporated partnerships. Review the nature of all shared financial accounts and credit cards. Structure your holdings and business transactions in a manner that increases success while reducing the impact of taxation, here in the US and around the world.
You’ve worked hard. You are prudent. You deserve to keep and protect all you’ve worked to build and continue to grow. You and those you care about most are worth a sensible asset protection strategy.
We invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.
