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Protecting Your Assets: Essential Strategies for Wealth Preservation

Summary:

As a successful professional, business owner, or individual with significant wealth, you've likely considered the risks posed by today's lawsuit-prone environment. Your financial success could make you a target for baseless litigation.

As a successful professional, business owner, or individual with significant wealth, you've likely considered the risks posed by today's lawsuit-prone environment. Your financial success could make you a target for baseless litigation.

Yet, have you taken concrete steps to defend your wealth against potential legal challenges? Many wealthy individuals and families fail to implement proper asset protection measures, leaving their hard-earned assets vulnerable.

​Fortunately, there are multiple effective strategies available to protect your wealth from unjustified claims. Let's explore the fundamentals of asset protection planning and how you can use it to your advantage.

Understanding Asset Protection Planning

It's important to note that asset protection planning isn't a standalone legal discipline. Rather, it encompasses various strategies and tools within legal risk planning, which is itself a component of comprehensive risk management.

While asset protection planning utilizes diverse approaches, it primarily seeks to achieve two core objectives:

  • Prevent and discourage litigation. The most effective asset protection plans often prevent lawsuits from materializing in the first place. When properly structured, these plans can be so robust that potential litigants never challenge them, avoiding court proceedings entirely.
  • Drive favorable settlement outcomes. If litigation proceeds, your goal is to minimize potential losses. A well-designed plan can create significant obstacles for creditors attempting to collect on court judgments. When creditors face uncertainty about their ability to collect, they're more likely to accept settlements that work in your favor. Consider also the time and expense of prolonged legal battles – these factors often motivate creditors to settle for less or abandon their claims altogether.

Effective asset protection planning isn't about concealing assets. Success requires transparency and openness. In fact, you want potential creditors to clearly understand the protective measures you've implemented. When they recognize the legal hurdles they'll face in attempting to access your assets, they're more likely to pursue reasonable settlements.

ESSENTIAL COMPONENTS OF ASSET PROTECTION PLANNING

Consider these crucial elements when developing your asset protection strategy:

  • Maintain adaptability. Your plan should be adjustable to accommodate changes in laws and circumstances.
  • Layer multiple protections. Implementing various protective strategies creates redundancy that strengthens your overall protection. Many approaches can work together – for instance, certain estate planning tools that primarily facilitate wealth transfer can also provide creditor protection, effectively serving dual purposes.
  • Ensure cost efficiency. Consider both initial implementation costs and ongoing maintenance expenses. Evaluate whether the protective benefits justify the financial investment.
  • Act preemptively. Implement protection strategies well before any threats emerge. Attempting to shield assets after legal troubles begin (or appear imminent) could result in court invalidation of your strategy and potentially lead to charges of fraudulent conveyance, contempt, or civil conspiracy.

Maintaining Your Protection Plan

Asset protection isn't a one-time solution. Like any crucial wealth management component, it requires regular review to ensure continued effectiveness.

This ongoing attention is necessary because asset protection is dynamic. Legal and regulatory changes can impact strategy effectiveness, while new protective approaches continue to emerge. Similarly, creditors and their representatives constantly develop new collection tactics.

​Your asset protection plan shouldn't sit dormant. Review it when significant changes occur – such as new tax legislation or shifts in your personal or professional financial situation. As a general rule, plans should be reviewed at least every five years.

The Value of Stress Testing

To verify your asset protection plan's effectiveness, consider requesting a stress test from your advisor. This formal evaluation assesses how likely your current plan, strategy, or financial products are to deliver your intended results. Stress testing is equally valuable when evaluating potential new protection strategies.

​Through stress testing, you may confirm that your current protection measures are adequate or identify necessary adjustments. Either way, you'll gain clarity about your wealth protection needs.

Tim McNeely
Advisor to Dental Entrepueriers 

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This material is intended to be used for educational purposes and does not constitute a solicitation to purchase a security or investment advisory services. Some material on this site has been researched and prepared by BSW Inner Circle and its affiliates, CEG Worldwide, LLC and AES Nation, LLC. Timothy J McNeely has retained AES Nation to conduct research and prepare informational materials for his use. Mr. McNeely is a member of CEG Roundtable and pays an annual fee for these services. Mr. McNeely is involved in these activities through The LifeStone Companies.

Some materials is published by the VFO Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright by AES Nation, LLC. This report is intended to be used for educational purposes only and does not constitute a solicitation to purchase any security or advisory services. Past performance is no guarantee of future results. An investment in any security involves significant risks and any investment may lose value. Refer to all risk disclosures related to each security product carefully before investing..

*Timothy J McNeely is an Investment Advisor Representative.  All investment advisory services are offered through a RIA. The LifeStone Companies are not owned or legally affiliated with RIA and the activities conducted by Mr. McNeely under The LifeStone Companies are considered educational activities and are separate outside business activities.

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