Wealth serves different purposes for different people. That purpose may be living a comfortable lifestyle, supporting charitable causes, providing for your family (now and after you’re gone), or reaching a variety of other goals. But what wealth means to everyone who has worked hard (and invested wisely) to achieve it is this: Financial freedom.
Financial freedom is having the means and independence to do what you want, when you want, with your life. But achieving financial freedom has 2 parts:
Step 1. Building your wealth
Step 2. Protecting your wealth
Our society grows more litigious with each passing day. Liability abounds, and both plaintiffs and their lawyers are encouraged to go after those with “deep pockets.” An “event of duress,” such as a lawsuit, can quickly wipe away all you’ve worked to achieve. The good news is that this can be prevented. You’ve already conquered Step 1. Now you need to work on Step 2 and start thinking about asset protection.
Asset protection defined
At the most basic level, asset protection consists of taking affirmative steps to shield your wealth in the case of an unexpected event of duress. Almost everyone engages in some form of asset protection. A common example of this is car insurance. You buy car insurance so that, in case you cause an accident, the insurance company pays the bill for you, rather than having to dip into your personal assets. The more insurance you buy, the better your assets are protected.
Asset protection ultimately involves a series of strategies that erect a legal wall between you and your assets, preventing access to them if you are held liable by the court. The more wealth you have to protect, the stronger and more sophisticated your asset protection plan needs to be. With the right asset protection plan in place, those who would try to take your wealth will find it difficult, if not impossible, to penetrate the wall you’ve built.
Where does liability come from?
As our legal system has evolved, lawsuits against businesses and individuals have become much more common. Thousands of lawsuits are started every day all across the country. Contingency fees mean big payouts for plaintiffs’ attorneys, which encourages them to aggressively pursue each case. There are many areas of the law where you can be held liable:
- Divorce: It takes just a quick glance at the news to see that divorce settlements can wreak havoc on one’s fortune, reaching into the millions or even billions of dollars.
- Real estate: Your personal or investment property can make you liable for injuries to guests or tenants (or guests of your tenants). Apartment complexes are breeding grounds for lawsuits by unhappy tenants.
- Personal injury: Driving is one of the most of dangerous things we do. A car accident can easily put your assets at risk, even if someone else is driving (like your child).
- Business investments: Even owning a small interest in a business that you have no power over can put your personal assets at risk if there is a dispute.
- Employees: If you own a business, a disgruntled employee (or several of them) may decide to sue you for an employment dispute. You can also be held liable for personal injuries and other damages caused by the actions of your employees while on the job.
As you can see, there is potential liability everywhere, in all aspects of our lives. And the higher your level of wealth (and the less it’s protected), the more likely someone is going to find it in their financial interest to pursue a lawsuit against you.
How does asset protection work in the real world?
The goal of asset protection is to separate you from your assets, so that your personal liability does not endanger them. This is done by titling your assets not in your personal name, but in various types of legal entities.
For instance, if you purchase a piece of real estate to use for rental income, you might form a limited liability company (LLC) to hold the property. That way, if a dispute arises with a tenant, the tenant will have to sue the LLC and his ability to recover will be limited to the assets held by the LLC.
The greater your assets, the more complex your asset protection plan will be, with multiple layers of protection. It will most likely involve setting up other legal entities, such as a limited partnership. Ultimately, it may involve setting up a domestic or offshore asset protection trust (or both), for the final layer of protection.
There is no “one size fits all” approach to asset protection. Each person’s financial goals and circumstances are different. This is why each asset protection plan needs to be carefully crafted with your needs in mind by a qualified asset protection attorney. Full-fledged asset protection involves setting up a sophisticated system of legal protection that serves to separate you from your assets, while still allowing you to maintain control over them.
What are the benefits of asset protection?
Having an asset protection plan in place (BEFORE an event of duress) provides many benefits for you (and your assets):
- Deterrence of lawsuits: When potential plaintiffs see the wall you’ve set up to shield your assets, they (and their attorneys) will think twice before undertaking such a challenge.
- Peace of mind: Knowing you have the proper asset protection plan in place frees you up to focus on more important things.
- Financial freedom: Protecting your assets means achieving true financial freedom, allowing you to enjoy the fruits of your labor without worry about liability.
- Wealth organization: Many people have significant assets, but they are disorganized and scattered around. An asset protection plan keeps them organized and simplifies the process of keeping track of them, reducing stress and work on your part.
Managing both your life and your wealth are easier when you have a solid asset protection plan in place, one that sufficiently separates you from your assets, while still allowing you to enjoy them.
Sollertis can help with asset protection
The Sollertis Master Asset Protection Plan™ is the framework for protecting all of the individual assets that contribute to financial success. Based on an analysis of your needs, each plan is a customized blueprint outlining the types and mix of legal structures needed to best meet your specific goals and objectives.
Once a MAPP™ is designed, you have a plan in place to protect your assets and to guide business, personal and investment decisions. Unlike traditional asset protection plans that take a “one-size-fits-all” approach, a MAPP™ adapts to changing circumstances. Whether implemented all at once or over time, you will create greater financial freedom knowing you’ve legally protected the wealth you have earned.
Contact us today to learn more about the Sollertis MAPP™ and our unique approach to managing all of your legal needs.
This material has been prepared by Sollertis for informational purposes only and nothing herein is intended as legal advice for any particular or individual situation. You should not rely upon any information herein as a source of legal advice, and receipt of any such information does not create an attorney-client relationship between you and Sollertis. Viewers and readers should not act upon this information without seeking professional legal counsel. Prior results do not guarantee a similar outcome.
