What is Wealth Planning?
Wealth Planning is the process of guarding your wealth to protect your assets from creditor claims. Both businesses and individuals look for Wealth Planning strategies to limit the access of creditors to certain valuable assets.
Wealth planning doesn’t mean that you ignore your debt obligations. It signifies that you acknowledge your debt and take responsibility without the need of creditors interfering with your property.
Usually, when a debtor has few assets, bankruptcy is recommended as the most convenient and favorable path to follow. But if a debtor has significant assets, coming up with a plan to protect them is highly recommended. There are exceptions to this rule. For example, retirement plans are exempt from creditors under federal bankruptcy law. However, wealth planning is a strategy that lets you establish your assets from non-exempt status to exempt.
How Do You Know if you need an Asset Protection Plan?
Start by asking a simple question? “Do I own any assets?”
If the answer is ‘yes,’ then wealth planning is something to consider. Choosing a plan that’s right for you will depend precisely on what is under your ownership and other factors such as your income requirement. Regardless of which method you choose, it’s always important to go with a plan that complies with U.S. laws and I.R.S regulations.
What are Some of the Most Popular Wealth Planning Strategies?
Increase You Liability Insurance
Increasing liability insurance is the first line of defense. An estate planning attorney who handles wealth management might make this recommendation along with setting up a wealth planning trust. Increasing liability limits is usually as simple as calling your broker and making the request.
Protect Yourself Against Tenant Lawsuits
If you are planning to invest in rental property or if you already own rental property, think about enhancing your protection against lawsuits from renters. You can do it by creating a business entity such as a corporation or an LLC or LLP.
Formalize all Informal Partnerships
Business partnerships can be time bombs for the reason that you are responsible for any actions, both good and bad, from your business partner. Any negligent actions by your partner could put your own assets at risk. It’s always prudent to stay away from bad partnerships or better yet establish your own business entity.
Establish a Sole Proprietorship
If you do part-time work or run a small business, you can set up a sole proprietorship. This protects you from any consequential actions from another business partner.
This list is limited, and there are many more strategies and options for protecting your wealth. The fundamental purpose, however, is to protect your assets legally. By doing so, you avoid illegal and unethical methods such as bankruptcy fraud, tax evasion, fraudulent transfer, and contempt. Experts recommend people begin the wealth planning process before a liability claim takes place. Plenty of methods are available for you to protect your assets. However, it’s essential to implement the right approach to prevent costly mistakes.
Getting Help from a Wealth Planning Attorney Near your Area
A wealth planning attorney can help you explore your options and set the right plan in motion. Sapient Law Group has helped many clients from different backgrounds with successful estate planning strategies, including wealth planning.
Have any questions about wealth planning or other estate planning solutions?
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