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Protecting Your Assets
By David Chandler
Have you ever wondered what would happen to your assets if you were
sued, in a car accident and it was your fault or if you became disabled or
even died? Most people consider this question but do very little about
taking the necessary steps to protect their assets.
The first thing to do is to have a plan in place before anything bad happens
to you. Even if you are one of the luck ones and nothing ever bad
happens, eventually as a fact, everyone dies.
When you die, your bank accounts are frozen, and an executor is
appointed to wrap up your estate. This means finding everyone you owed
money to, and settling the debts. If you have a family, and all your assets
are in your own name, your spouse could be unable to access your funds
for up to 2 years.
There are three major concerns when it comes to protecting your assets:
estate duties, income taxes, and lawsuits.
Estate duties
When you die, the government claims a percentage of the value of your
estate. This amount varies from country to country, and it could be
anything from 20% to as much as 55%.
The solution to the estate duty problem is to ensure that your estate is
worth as little as possible when you die. Moving your assets into a living
trust could be a good solution, as the trust is not taxed upon your death.
Income tax
How do you legally reduce your tax liability? One way is to decrease your
income to an absolute minimum. Anything you need could be paid for by a
business. For instance, if you need a new laptop, it could be paid for by
your corporation or living trust. It is a legitimate business expense, as long
as you use it for generating income, and not just for playing games.
The expenses of a business are deducted from its income before taxes are
calculated. For individuals working for an employer, taxes are deducted
before you even get your paycheck. That means that your personal
expenses are paid for with after-tax income. If a separate legal entity can
pay some of these expenses, it reduces the amount of money you need to
earn, and the amount of tax you need to pay.
Lawsuits
The first thing that happens when someone wants to sue you is that his or
her lawyer will try to find out what you are worth.
It is not difficult to find out someone's net worth by examining public
records. These days, on the internet, it is even easier. What you need to
do is look like a poor target. This could mean transferring as many assets
as possible into a separate legal entity, which you do not own, but do
control. This could be a living trust, or a corporation.
It might also mean that you ensure that properties in your own name are
mortgaged to the hilt, so that your net asset value (the difference between
what you own and what you owe) is as low as possible. Ideally, you want
your assets and your income to be as small as possible, so that you are
not worth suing you.
In conclusion
Everyone has different financial needs. Laws are different from country to
country, and from state to state. It is essential that you get professional
advice from a competent financial advisor before doing anything.
If you are in financial trouble, it is already too late. If you transfer assets in
order to put them out of reach of your creditors, it may be seen as
fraudulent and illegal. You need to have a plan in place before you are
sued, and before anyone tries to take your assets away.
You may think that you are too young to worry about asset protection, but
it is not too early to get a plan in place. It is a clich¨¦, but still true: If you
fail to plan, you plan to fail.
About the Author
For more information about protecting your assets, visit http://www.assetprotectioninfocenter.com
David Chandler
For your FREE Stock Market Trading Mini Course:
"What The Wall Street Hot Shots Won't Tell You!" go to: http://www.stockmarketgenie.com
Article Source: http://www.simplysearch4it.com/article/15382.html
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