Protecting your assets is best handled in preparation for circumstances, not as a quick response to them. It is important to remember that these steps should be taken before any legal action, such as a lawsuit, has been filed. Below are several common ways that your personal or primary home can be protected should a legal cause ever happen.
Almost every state has statutes that protect a certain amount of value of your home from creditors or during bankruptcy. Essentially if someone such as a creditor files a lawsuit against a respondent, the resulting case may require the sale of the home. The creditor will only get the remaining balance after selling fees, the mortgage balance and the homestead exemption amount. If homeowners want to take advantage of this exemption, they should contact us.
Tenancy by the Entirety
Certain states offer unique protection called “tenancy by the entirety.” Essentially this protects the home if one spouse is sued for reasons that have nothing to do with the other spouse. Essentially this law asserts that it is not fair for one spouse to lose their home because of the actions of the other. Even if your state does not have this law in the books you can accomplish the same result in the other ways described herein.
Create a Domestic Asset Protection Trust
This is a self-settled trust created and protected under certain state statutes. In general, these types of trusts are becoming more accepted each year as new states adopt some form of DAPT trust laws. This type of trust can provide certain protections to homes, farms, vacation homes or beach houses that you plan on keeping for life or a very long time. In most states, the longer a property is held in a DAPT, the more it will be protected in the future.
Speak with a professional today
There are many ways in which your personal and business assets can be protected. Perhaps you run a business where you must take financial risks. Putting the house in your low-risk spouse’s name, for example, could help protect your home should legal concerns arise. You may also consider getting an “Umbrella Risk” insurance policy that protects you from a wide variety of situations. These Asset Protection techniques should be components in your Asset Protection System™. Remember that it is wisest to plan for a storm while the skies above are blue.