“Planning is bringing the future into the present so that you can do something about it now.”
Asset protection means having an actionable plan to protect your assets in case the need arises.
We spend a lifetime building our assets. Why risk suddenly losing everything you’ve built? Every family should have some basic legal protection over their assets. The key to asset protection planning is planning before the need arises. If you wait to plan until you need the protection‚ it’s usually too late.
The primary line of defense for protecting your assets is insurance coverage. But what if your insurance doesn’t cover everything?
Certain assets are protected against creditors by operation of Arizona Law – called exempt assets. Arizona law exempts your homestead‚ up to $150‚000‚ and various personal property‚ pensions and retirement accounts‚ however the value of these exemptions are quite low.
Your remaining assets are non–exempt assets and have exposure to creditors. This includes everything you own that is not specifically exempted including bank accounts over the exclusion amount‚ brokerage accounts and non–homestead real estate owned in your name. However‚ you can legally arrange your non–exempt assets to protect them from the claims of future potential creditors through asset protection planning.
No one can make themselves and their assets 100% judgment proof‚ however making it as difficult as possible to collect judgments against your assets acts as a deterrent to lawsuits and frivolous claims against you. The number one mistake individuals make is to wait until a claim arises before protecting their assets. Attempting to gift‚ move or hide assets after you have exposure is fraud and is subject to the Uniform Fraudulent Transfer Act (UFTA). A fraudulent transfer is an asset transfer that a debtor makes to try to defeat a creditor’s collection efforts to collect against the asset. The UFTA has been adopted by all but a handful of states. UFTA is embodied in the Arizona Revised Statutes §§44–1001 – 1010.
Using tools such as Limited Liability Companies‚ Family Limited Partnerships‚ and Asset Protection Trusts‚ one can effective plan against future liabilities and frivolous claims.