ASSET PROTECTION SHOULD BE PART OF YOUR ESTATE PLAN

We spend a lot of time on building and learning how to build our fortunes; unfortunately, we spend very little time and very little is ever taught on the subject of legally protecting our fortunes. Every family should have at least some basic knowledge of how to legally protect your assets.
Your primary line of defense for protecting your assets is and always will be your insurance coverages. But, what if your insurance doesn’t cover everything?

Certain of your assets are protected against creditors by operation of law - these are what we call exempt assets. For example, in Texas, the law exempts your entire homestead and up to $60,000 of personal property per family, ($30,000 for single persons). Federal law exempts ERISA regulated retirement plan contributions. In a few states, like Texas, not only are life insurance proceeds protected from the creditors of the insured and the beneficiary, but also the cash value of life insurance is protected (with no dollar limit) from claims of creditors of the policy owner.

Your remaining assets are non-exempt assets and have exposure to creditors. These include your bank and brokerage accounts and non-homestead real estate owned in your own name. However, you can legally arrange your non-exempt assets to protect them from the claims of future potential creditors. Look for coming articles in which Legal Smarts will discuss various techniques (as opposed to gimmicks) for legally protecting assets.