Posted on Friday, August 11th, 2023

businessman protecting insurance and assuranceAsset Protection

Asset protection planning is a way to position your assets to discourage lawsuits. This means that you can keep essential possessions like money and property out of the hands of creditors while still staying in compliance with applicable debtor-creditor laws.

Below are Three Things to Know about Asset Protection:

Early Planning

Asset protection planning should be done as soon as possible. Avoid waiting until you suspect a creditor will be filing a claim against you.

Do Not Panic ­

If you are involved in a lawsuit, it is essential to consult a Florida asset protection lawyer before transferring any assets to another party. Impulsively transferring assets to a family member or friend could result in fraudulent conveyance and may also subject you to gift tax consequences.

Asset Protection is not only for the Wealthy

There is a common misconception that asset protection planning is only for high-net-worth individuals. Asset protection planning is not just for the rich. Anyone can get sued; if you have valuable assets, creditors may attempt to take them away from you. Therefore, it is essential to protect the assets that you worked so hard to attain.

Asset Protection Planning Tools:

While good asset protection tools are only partially impenetrable, they are still important. A lack of exposed assets is the best deterrent to suing in the first place. The three strategies listed below are simple ways that you can follow today to protect your assets:

Tenancy by the Entireties

This type of property ownership is only available to married couples. Both spouses have an equal interest in the property. Therefore, most times, if a creditor has a judgment against one spouse, they cannot take the property away from the couple, unless both spouses are liable for the debt.

Homestead

In Florida, certain homestead protections are afforded to any natural person who maintains a primary and permanent residence in Florida. Article X Section 4 of the Florida Constitution states that an individual’s homestead is exempt from a court-ordered sale to satisfy a judgment by most creditors.  There are no judgments that can be filed against a homestead other than for the payment of the following:

  • taxes and assessments related to the homestead property;
  • obligations contracted for the purchase, the improvement, or the repair of the homestead property; and
  • obligations contracted for house, field or other labor performed on the homestead property.

Forming a Florida Limited Liability Company

Another asset protection planning tool, that is beneficial to non-homestead property, is forming a limited liability company (LLC) and using it to hold your assets. If someone files a personal lawsuit against the LLC owners, getting their hands on the owners’ assets in the LLC may be difficult. Having an operating agreement for your LLC drafted by a Florida business attorney is essential to ensure your company is legally protected.

Important Takeaway

If you currently own or are considering acquiring assets it is essential to begin the planning process today. Do not wait until a lawsuit has been filed against you. Contact Nishad Khan P.L. to schedule a consultation with one of our experienced asset protection attorneys.