When the term “asset protection” is discussed, we are often engaged in the process of estate planning and discussing our options for future wealth preservation with an attorney. After a lifetime of working hard, sacrificing, and saving, we all want to protect our accumulated assets. Usually, we are looking for ways to protect and prepare for the future needs of our loved ones. With meaningful foresight and the assistance of a skilled trust asset protection attorney in Frisco, you can ensure that the wealth you have amassed will be safe from excessive taxation, creditors, and potential lawsuits.
At the Kazi Law Firm, our trust asset protection lawyers in Frisco have extensive knowledge and experience with asset protection plans that are customized to your needs and goals.
A common misconception in the area of asset protection, is that only high-profile celebrities or wealthy physicians and politicians are plagued by vicious lawsuits. However, that is simply not the case. We live in a highly litigious society and thus, we are all at risk, regardless of our name, fame, or lack thereof. There is a high likelihood in your lifetime that you will be sued or have fraudulent claims or frivolous lawsuits brought against you. Some of the most common types of suits are the following:
Therefore, it is even more critical that you have the advice and guidance of your trusted asset protection lawyer in Frisco. There are several options for asset protection in Texas, including but not limited to: drafting pre-marital and post-marital agreements, creating an irrevocable trust, LLC creation, establishing charitable foundations, opening retirements accounts, buying annuities, giving substantial monetary gifts to your beneficiaries while you are alive, opening college savings plans, purchasing full coverage insurance policies, and creating family trusts.
Asset Protection Strategies
Irrevocable trusts are an excellent asset protection tool since these trusts not only relinquish control of the money to the trustee, but also give that control permanently. The assets covered by an irrevocable trust are strictly off limits to creditors or lawsuits because the trustor no longer has any power or control over them. Additionally, these trusts avoid probate, which further protect your assets and ensure a seamless transition to your beneficiaries. If you would like to explore this option further, consult with your trust asset protection lawyer in Frisco.
Additionally, the state of Texas provides superior homestead and property protections by law. As a general rule, only individuals, not corporations or LLCs, may take advantage of homestead protections. Your principal residence, or homestead, should always be considered in any asset protection strategy. Texas has one of the most advantageous homestead protections in the nation. Under state exemptions, the entire value of your homestead is protected from any forced sale to pay creditors or judgments instead of just a portion of it. Thus, no matter the value of your homestead property, no creditor or lawsuit can force its sale.
For example, Texas does not cap the monetary value of your homestead like some states do. Instead, your homestead is measured by acreage. You are allowed to keep 200 acres of rural property and 10 acres of urban property safe from creditors. Furthermore, your personal property is also protected up to $60,000 for a family or $30,000 for a single person. Remember, personal property in Texas includes home furnishings, jewelry, cars, farming or ranching vehicles, clothing, pets, sporting equipment, 12 heads of cattle, two guns, and family heirlooms. There are, however, exceptions to this protection in the case of mortgage or home equity liens, property taxes, federal taxes, or any other liens that may have pre-dated property exemption laws. https://statutes.capitol.texas.gov/Docs/PR/htm/PR.41.htm
In addition to those afforded by the state, there are a wide variety of devices and strategies to protect business or personal assets by: creating legal barriers that protect you from personal liability, separating assets with separate legal entities, maintaining public record anonymity, using state income and homestead protections, utilizing a series LLC to compartmentalize and safeguard multiple assets, and using trusts to protect familial assets.
Your trust asset protection lawyer in Frisco will customize an approach created just for your needs and goals while using methodical strategies and vehicles to protect your assets from lawsuits and creditors.
Separating Business & Personal Assets
Personal asset protection and business asset protection may use different vehicles, but protection is still the key. Business assets can be particularly vulnerable when the entity that operates the business owns the assets. Therefore, protecting business assets will start with separating the core business activities from the ownership of its assets.
Innovative asset protection strategies will separate and insulate assets from the core business and each other, so if a lawsuit attaches to one, it will be limited in its reach. Many times, this will include the use of multiple entities such as corporations, partnerships, and LLCs, in combination, to achieve the greatest degree of asset protection. https://www.sos.state.tx.us/corp/sosda/index.shtml
One of the greatest tools to do so is by creating a Limited Liability Company (LLC) or a series LLC. A series LLC or holding company will hold and compartmentalize assets to keep them insulated from each other and from lawsuits and creditors that target the business. Even if a suit is filed against the main shell LLC, the holding company has not done business with anyone as a basis for any legal action against it. It’s prudent to consult with your trust asset protection lawyer in Frisco TX to see if this legal structure is the right one for your small business.
Trust Asset Protection
Asset protection trusts are valuable tools that will hold assets independently from an individual. Trusts can avoid probate, allow for ease of transfer, and offer privacy. An individual can establish a trust as a grantor and also be a beneficiary of the trust with access to its assets.
Although a trust does not offer the same level of liability barrier as an LLC, depending on your situation and goals, utilizing trusts can be an advantageous strategy to offer some level of protection for your assets while maintaining control of them. There are a plethora of trusts that can be created under the umbrella of estate planning. Examples include domestic asset protection trusts, irrevocable life insurance trusts, spousal lifetime access trusts, irrevocable gifting trusts, qualified personal residence trusts, and special powers of appointment trusts to name a few. Your trust asset protection attorney in Frisco can guide you in selecting the appropriate trust to meet your estate planning goals.
There are some types of income, limited personal property, and retirement or prepaid tuition accounts that are also exempt from creditors and lawsuits. A creditor cannot garnish wages; however, once it becomes cash in a bank account, creditors can have access to it. Consequently, cash is extremely vulnerable. For someone who wants to protect cash from a creditor or lawsuit, it can carefully and slowly be converted into exempted assets or used to pay for legitimate things. However, if a lawsuit is pending, this conversion may be challenged, and the individual must be able to defend any cash conversions as being money spent in the “ordinary course of business” that is justifiable.
Other exempted assets exist under law. A creditor cannot collect money from some sources such as Social Security, VA benefits, or spousal or child support. Other exempted assets include college tuition savings plans and prepaid tuition plans, annuities, life insurance policies, IRAs, 401(k)s, traditional pension plans, and profit-sharing plans.
It is imperative to keep in mind that complete, 100% asset protection is not entirely possible, but everyone can benefit from some level of asset protection. Thus, call your trust asset protection lawyer in Frisco to discuss your situation and create a customized plan to give you and your family peace of mind.