Asset protection planning is crucial in the event you have got any money, investments, or house you want to safeguard. If you have a business or are starting one, you should be sure that to have an asset protection planning to safeguard your assets. There are numerous risks to your financial protection, and asset protection planning is vital to keep your property and money in good hands in your lifetime, as well as to ensure to pass those to your loved ones. With that in mind, this post will share some of the reasons why asset protection planning is important in the first place.
The Risk of Incapacity
Once you become incapacitated, you will not be able to take care of your property or manage investments. Significant losses could occur if you do not designate a trusted person to manage your assets. You can plan to make sure you have chosen the ideal person to control your assets in the event of incapacity. A living will or power of attorney are useful tools to safeguard your assets in the event of incapacity.
Risk of Business Loss
If you run your own business, you may face the possibility of a personal loss if the business fails or if the business is sued. You don’t want to lose your home or other assets due to business problems, so you should explore methods to ensure that your assets are kept safe. Forming a limited liability company (LLC) may be the right alternative because, as long as you follow the business formalities, you can limit the risk of losing the money invested in your business.
Inheritance Tax Losses
If you pass away and leave your assets to your heirs, estate taxes can be assessed and significantly reduce the value of your estate. This is problematic for people with large estates. As of 2016, estate taxes are assessed only if an estate exceeds $5.45 million. But people with farms or businesses that count as part of the inheritance can quickly reach that amount, and an inheritance could be in jeopardy if there isn’t enough money to cover taxes on average farmland or businesses.