People ask me questions all the time about asset protection.

Thankfully it’s not that hard to get a baseline understanding of it.

Here is my asset protection overview in 3 minutes (or less).

First, who needs asset protection?

EVERYONE!

The better question is, “what level of asset protection do you need?”

And the answer to that question (in my opinion, which is all this is…) is “whatever allows you to sleep at night.”

Second, what kind of asset protections are out there?

Asset protection foundations should pretty much always be grounded in insurance.

Car insurance in case you’re in an accident (don’t forget uninsured motorist coverage).

Disability insurance in case you can’t work (often your employer policy doesn’t give you full coverage).

Home owner’s insurance for damage to your home.

Life insurance in case you die unexpectedly to provide liquidity to your family.

And umbrella insurance to cover you for a rainy day (see what I did there! This type of insurance is really supplemental, in case your other insurance is maxed out, this can step in).

For most people, this is enough.

If, however, you are in a highly volatile profession or have a risky lifestyle, you may want more.

The next layer of coverage for some would be an LLC.

For an LLC it is best to have a legitimate business purpose (real estate is where most people use these) and they allow you to silo risk – anything in the LLC is not subject to events that happen outside of the LLC (a personal car accident won’t put LLC assets at risk) and vice versa (a business screw up won’t get your wages garnished).

The next, and final step after that would be an irrevocable trust.

The great news about irrevocable trusts are you get a lot of protection. The bad news is you lose A LOT of control and/or enjoyment.

With an irrevocable trust nothing is in your name and you are not in charge of the assets (or you are not the recipient of the benefit of the assets). Hence, loss of control and enjoyment.

Most people can satisfy their risk aversion with insurance (this is where I steer most people).

And that is asset protection in three minutes.

Cheers,

Christopher Small
CMS Law Firm LLC

PS – if you want some nuts and bolts estate planning and probate info you can see all of it on my YouTube channel – http://www.youtube.com/c/CMSLawFirmLLC

And PPS – if you need help with estate planning or probate the easiest thing to do is click the link and book a time to chat – https://cmslawfirm.com