Shield Your Wealth: Protect Assets from Lawsuits & Creditors

By Brett Gottlieb

When unforeseen debt or legal challenges arise, it can feel like your financial future is at risk. While we can’t predict every obstacle life may bring, protecting assets by taking proactive steps can help give you confidence during uncertain times.

In this article, I outline advanced techniques for shielding your wealth from potential creditors and lawsuits with strategies developed from years of experience working with high net worth individuals, CPAs, attorneys, government agencies and other strategic partners.

Let’s dive into how you can help safeguard your assets against unexpected risks.

Understanding the Risks

Before taking any preventative action to protect assets, it’s essential to understand the potential hazards. Here are some typical situations:

• Lawsuits: A lawsuit can result from an automobile accident, an angry neighbor, or even an error made by a professional. If a judgment is ruled against you, your assets could be seized to pay off the debt.
• Debt collection: Delinquent personal loans, credit card payments, or medical costs can lead to aggressive debt collection activities. To make up for their losses, creditors typically try to seize your assets or garnish your salary.
• Business Liabilities: If you own a business, you could be personally liable for its debts and obligations. A lawsuit against your business could put your personal assets at risk.
• Divorce Settlements: High-net-worth individuals often face complex and substantial financial settlements in divorce proceedings, which can significantly impact their assets.

Creating Your Asset Protection Strategy

Thankfully, there are a number of strategies you can use for protecting assets. I list some common ones below:

• Homestead exemptions: Homestead exemptions, which shield a portion of the equity in your principal residence from creditors, are provided by the majority of states including California. To learn about the restrictions, look into the particular exemptions in your state.
• Insurance: Your first line of defense is liability insurance such as an umbrella policy. Depending on your line of work, you should also think about professional liability, auto, and homeowners insurance. These plans can help to shield your assets from being immediately taken and can also pay for court expenses.
• Trusts: Irrevocable trusts can be a potent tool for shielding your assets. You give up ownership and control of assets when you transfer them to an irrevocable trust, but doing so usually renders them inaccessible to creditors. When utilizing trusts, there are tax ramifications and restrictions you need to consider, so consulting with a financial professional, your CPA, and attorney is essential.
• Retirement Plans: Typically, creditors cannot access your retirement plans, such as IRAs or employer-sponsored 401(k) accounts. However, exceptions exist, such as when you owe back taxes or past-due alimony payments, which may allow creditors to reach your retirement funds.
• Limited liability companies (LLCs): You can keep your personal assets separate from those of the business entity by forming an LLC for your company or investment properties. In most cases, your personal assets are safeguarded in the event that the firm is sued.
• Titling strategies: Joint property ownership (tenancy by the entirety) with a spouse or other reliable person can provide some defense against creditors. But this strategy has its limitations, and it might not work in every circumstance.
• Prenuptial Agreement: Prenuptial agreements are crucial for protecting your assets because they establish clear terms for asset division in the event of a divorce. By outlining financial arrangements and ownership rights beforehand, prenuptial agreements help safeguard your wealth and minimize potential disputes, ensuring your assets remain protected.

It’s important to remember here that planning is key. It’s never smart to wait to use asset safeguarding strategies until you’re actually faced with legal action or financial difficulties. Planning ahead is essential to optimize effectiveness.

The Bottom Line

Protecting assets is crucial for building a solid financial future. By understanding the threats and defensive strategies explained above, you can work to create a shield against potential lawsuits and creditors.

Remember that navigating the legal and financial complexities of asset safety requires proactive planning with the assistance of trained professionals. You may help safeguard your hard-earned money and give yourself and your loved ones financial confidence by implementing the appropriate combination of strategies.

Reach Out Today for Help Protecting Assets

Developing asset protection strategies can be a sophisticated process, requiring experienced guidance in state regulations and the financial complexities of high-net-worth individuals or business owners.

At Comprehensive Advisor, we, with the help of CPAs, attorneys, and other strategic partners, help craft personalized asset defense plans tailored to your unique financial landscape. Our mission is to help you design the life you desire by providing professional financial planning and wealth management. Email us at info@ComprehensiveAdvisor.com or call (760) 813-2125.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees, in business administration and economics, and is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals, and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

Our team of qualified professionals have experience in the financial service industry, and our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial strategies for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a comprehensive retirement roadmap to help ensure their assets are preserved and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

This article is meant to be general and is not investment or financial advice or a recommendation of any kind. Please consult your financial advisor before making financial decisions. For more detailed information, contact Comprehensive Advisor, LLC.

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. Insurance products are offered through the insurance business C.A. Financial & Insurance Services. Comprehensive Advisor, LLC is an Investment Advisory practice that offers products and services through AE Wealth Management LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by C.A. Financial & Insurance Services are not subject to investment Advisor requirements. CA Ins. Lic. #6000262.  3016065 – 4/25