Protecting Your Assets and Securing Your Future
The dominant lion may lounge around the place… but when his territory and pride are threatened, he’ll stop at nothing to protect them. And a typical gorilla father will go to battle with other males, who are known to kill baby gorillas as they try to take over the group. Meanwhile, Emperor Penguin dads are super protective over their mates, their young and the nest, possibly because they play an important role in keeping the eggs warm – balancing it between their bellies and the top of their toes!
These animals are all involved in some kind of asset protection … and it’s often a matter of life and death.
No surprise that humans need to take asset protection seriously too and the stakes can be pretty high. Asset Protection involves keeping your property out of the hands of someone asserting a right against you, perhaps to satisfy a loan or because of litigation. It is sensible to engage in Asset Protection Planning, whereby non-exempt assets (those subject to creditors’ claims) are repositioned as exempt assets (those not accessible to creditors).
Let’s be clear that there are laws in most territories that protect creditors against the transfer of assets with the intent to hinder, delay, or defraud a creditor. These transfers will likely be deemed fraudulent and may be reversed by a court. So Asset Protection Planning needs to begin early on the basis that life is uncertain, business is uncertain and there is always the chance of claims against assets.
Asset Protection Planning is closely tied up with your Financial Plan which is based on analysis of your sources of income, current and future expenses, how much wealth you plan to accumulate and what you want to leave to your heirs. Part of the plan is to reposition (current and future) assets so they are exempt from creditors.
Your Financial Plan is closely related to your Estate Plan which defines who will manage your assets and take care of your family after you die (or become incapacitated). Certain corporate and trust structures may protect your heirs from claims against the family assets, giving everyone peace of mind.
It’s essential to consider this early. And talk to an advisor. Your accountant is well-placed to help you!
Most humans will not have to fight an invader to the death but neglecting to plan can have devastating consequences.