estate planning documents on table with calculator

Because of the world’s current economic situation, it’s become more important to protect your assets.

With the rising cost of living and increasing debt burden, many people are finding themselves in situations where they may need to declare bankruptcy.

If you have assets that creditors might take an interest in—such as a house or car—you need to protect them from being taken away.  

However, you may not be too familiar with what to do or which action to take. And so, this post discloses proven ways to protect your assets from any potential threat. Read on to know them.

man holding assets sign

What Are Personal Assets?

Personal assets are the things you own that have value, such as your home and car. They can also include everything from jewelry, art, collectibles, and furniture, to cash in bank accounts or stocks, mutual funds, or retirement accounts (including life insurance).

Personal assets also include businesses you own that generate income for yourself or others. If you inherit an estate through a will or trust document, it’s also considered a personal asset. These are the things you need to protect against any risks.

Protecting Your Personal Assets

When protecting your assets, you’ll need to consider the type of asset you will safeguard (tangible or intangible). You’ll also need to determine whether your state requires specific documentation for certain types of protection.

After doing that, you can follow the following ways for asset management:

  1. Hire A Lawyer

When you’re facing family issues or bankruptcy, it’s vital to hire a lawyer to help you through the process. Reputable lawyers have a lot of experience with these situations. They can ensure that your assets are protected.

An experienced attorney can help you sort through the legal issues. They will also inform you whether or not these issues will impact your assets. 

Sometimes, you may need an attorney to handle a specific situation (like if you and your partner decided to split up and you need someone who knows how to protect assets from divorce).

So, if you find yourself in any legal situation that threatens your assets, contact a lawyer right away.

  1. Get Insurance

Another way to protect your assets is by getting insurance. There are different types of insurance you can get depending on your need.

For instance, there are life insurance, disability insurance, and long-term care insurance. If you have a lot of personal assets and want to protect them, buying life insurance is a good idea.

You can use the proceeds from your policy to pay off mortgages and other debts or provide for your loved ones after your death.

You can even set up an irrevocable life insurance trust that protects your assets while allowing you to take advantage of some tax benefits.

  1. Limit Your Debt And Liability

If you own a business, you can limit your liability by incorporating it. This method gives you limited liability protection if someone sues or claims damages from your company. 

If you have non-business assets, only take out what you need and ensure you have enough money in the bank to pay for it. Also, only spend what you can account for without eating into your savings.

One other thing you can do is to establish proper asset management practices, such as moving from reactive maintenance to predictive maintenance.

  1. Make An Estate Plan

An estate plan is a set of documents that help ensure your property is distributed as you intend after death or incapacity (inability to manage one’s affairs). It includes documents like trusts, powers of attorney, and healthcare directives (such as advance directives).

It also involves writing wills that let you name someone to take care of your assets if something happens to you. Without a last will, the court will be the one to decide who gets what, leading to confusion and property loss. 

The purpose of estate planning is not simply about protecting assets. It’s about ensuring that loved ones receive your estate when it comes time for the distribution of property after death or incapacity. That way, they can continue to watch over your affairs.

  1. Maintain Separate Accounts

The best way to protect your assets is by keeping them separate from any business accounts.

If you have a small business, put your profits in an independent bank account and don’t use them for anything other than business expenses. Never mix your personal assets with your business bank account.

Doing this is essential to avoid potential conflicts of interest or allegations that you used the funds for personal gain.

For instance, if a customer sues you for damages related to your business, they can only sue you for the amount of money in your business bank account. They won’t be able to access your funds or assets if you separate them from your business account.

  1. Avoid Personal Guarantees And Co-signing

A personal guarantee is when you’re personally responsible for a debt. For example, if you borrow money from someone and don’t pay it back, that person can take your car or house if you signed a contract that says so.

Co-signing means that two people are on loan together, meaning that both parties must agree before anything happens with the money. So, if your business partner defaults on their loan or doesn’t pay their bills, the lender can come after you for payment.

And if you have personal assets, the lender can take that to pay for the debts of your business. So, it’s best to avoid giving personal guarantees and co-signing unless necessary.

  1. Keep Good Records

Another way to protect your assets is by keeping good records. You can do this by organizing all your financial documents (including tax returns, bank statements, and investment records) and ensuring they’re easily accessible.

This way, they can be filed away in case of an audit. If you have physical assets that aren’t adequately titled or registered, consider doing so as soon as possible to avoid confusion.

It will make it easier for your family lawyer to prove that the assets belong to you if someone tries to claim them as part of their proceedings.  

Conclusion

As you have read, there are many ways to protect your assets. It doesn’t have to be expensive or time-consuming. And if you have a good lawyer on your side, they will know which protections are proper for you and how best to implement them.

With their help and the methods above, you can significantly reduce your chances of losing valuable things.