The Time for Asset Protection is Now

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Americans today are experiencing the worst economic crisis of our generation. Our financial markets are suffering historic losses, banks are going under, the real estate market is crumbling, the unemployment rate is climbing, and almost $1 trillion of our taxpayer dollars have been allocated to bailout Wall Street. The word “crisis” has literally become the new “mantra” of news reporting. Turn on any news channel, and at the top of each hour, there is breaking news of yet another economic debacle.

The crisis on “Wall Street” has ended up affecting all of us on “Main Street” even though most of us had nothing to do with the greed and irresponsibility that created this problem in the first place.

Seventy-eight percent of Americans disapprove of the job that Congress is doing, and only 17 percent of Americans believe that our country is headed in the right direction. It comes as no surprise that the recent election results have given a clear mandate for “change” and the new president certainly has his work cut out for him.

In facing uncertain financial times, it is more important than ever to protect the assets you have already worked so hard to accumulate. Your home, savings, children’s education fund and future earnings could be at jeopardy unless affirmative steps are taken to safeguard them from creditors’ claims. Fortunately, there is much that can be done to build a fortress around your valuables; however, the key is to get your plan in place before financial problems arise.

Once your business fails, you lose your job, or your investment property is foreclosed on, your asset protection options shrink considerably. Like life insurance, you need to have a sound asset protection plan in place before you have a disaster staring you in the face.

So, what is asset protection planning? In short, asset protection planning is a process of using legal methods to organize your assets, affairs and business structures to shield your assets from potential creditors and reduce the likelihood of being the target of a lawsuit.

While we cannot provide exact details on how to protect your assets in this short forum, and given that every situation is different, protection techniques generally fall into three categories: (i) state and federal exemption laws, (ii) domestic entities such as trusts and limited liability companies, and (iii) offshore planning. With respect to the first category, we Floridians have numerous laws that we can use to protect our homes, retirement accounts and even our wages.

It is important, however, to understand not only the rule, but also the exceptions to these rules. For example, if your primary residence is located within city limits, it is not fully protected under Florida’s Constitution unless it is one-half acre or less. Additionally, trusts, which come in numerous types, do not automatically guarantee protection to the beneficiaries. Likewise, limited liability companies that are not properly structured may do little or nothing to shield your assets.

As previously mentioned, there is no “one size fits all” solution to protecting your assets. That is the reason it is important to engage a competent attorney who specializes in this area and who can explain both the positives and negatives of any technique they recommend. We recommend that you sit down with your CPA, make a comprehensive list of your assets, and jointly meet with an expert attorney to put things in place.

The time to act is NOW!

Amol Nirgudkar, CPA, is the managing partner of Reliance Consulting LLC. Adam O. Kirwan, J.D., LL.M. is the founder of the Kirwan Law Firm and the author of the book, “The Florida Asset Protection Guide.” Both and have worked together in helping their clients with asset protection. Nirgudkar can be reached at amol@reliancecpa.com and Kirwan at akirwan@kirwanlawfirm.com

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