Assets are valuable pieces of property that can be owned by an individual, but what is asset protection? Estate planning is the process of determining how to distribute valuable assets to beneficiaries after death. However, creditors and legal actions can take those assets via claims on the estate and other forms of liability. These legal claims could deplete an estate and weaken the legacy left to beneficiaries. Asset protection strategies are legal methods to guard against these claims and protect the individual’s assets.
Asset protection can also factor into business law, but most average individuals may consider asset protection for estate planning. The various resources available to protect assets from creditors can be overwhelming, but understanding effective strategies can help protect valuable property and guard against liability claims. What is asset protection? A skilled South Carolina estate planning attorney can answer these questions and more in a personalized consultation. Contact the office by calling (888) 748-5464 now.
Fundamentals of Asset Protection
Asset protection is a broad umbrella that covers a number of legal strategies. Essentially, any form of asset protection is a legal method of isolating assets from the individual so that creditor claims or liability lawsuits cannot access the assets. According to S.C. Code § 37-30-110, a creditor is an individual or corporation that provides credit or a lease to the purchaser of property. Generally, these strategies allow the individual to retain a degree of control over the asset while it remains protected by whatever method is chosen. These strategies are viable for both individuals and corporations and can be utilized in many different capacities. A skilled attorney can help individuals evaluate the various options and determine which form of asset protection is most beneficial.
What Asset Protection Is Not
However, while “what is asset protection” is an important question, one must understand what asset protection is not before discussing asset protection strategies. Asset protection does not involve concealment of assets, fraud, illegal transfers, contempt, tax evasion, or any similar action. These actions are illegal and not considered viable ways to protect assets. Understanding the limits of asset protection can help protect individuals from legal action that could damage their asset protection strategies.
Common Asset Protection Strategies
When building an asset protection strategy, understanding the options available is essential. Different strategies may benefit individuals differently, and having in-depth knowledge of the various benefits and drawbacks can help individuals make informed decisions. Additionally, there may be other, less-known asset protection options available that an estate planning attorney can inform you of. A solid asset protection strategy may include multiple legal entities and other considerations, depending on the size of the estate and the value of the assets.
Asset Protection Trust
According to the Legal Information Institute, an asset protection trust is a type of trust that meets certain criteria. A trust is governed by the documentation written when it is created, which can include several clauses that impact how a trust is operated. To qualify as an asset protection trust, this trust must use a trust protector who can oversee the trustee. This office gives another individual who is not the trustee authority over the trust. Additionally, the trust must include a distress clause and a flight clause. These clauses give the trustee greater authority over the assets of the trust and may allow them to repatriate assets to protect them.
Speak to an experienced South Carolina estate planning attorney from King Law Offices to learn the merits and legal nuances of asset protection in South Carolina.
Limited Liability Corporations (LLCs)
A limited liability corporation (LLC) is generally used to protect personal assets from claims on a business. However, this same feature of LLCs can also protect other assets from personal liability claims. LLCs are most often used for business assets, but these benefits can often be a key piece of an asset protection plan. Business assets can be some of the most valuable assets an individual owns, and an LLC or other business registrations could help protect these assets from creditors or personal liability.
Umbrella Insurance Coverage
Another form of asset protection that some may use is umbrella coverage. This form of insurance protects individuals from major liability claims and other legal issues, and it is generally paired with existing insurance plans. The concept of umbrella coverage is to cover additional expenses beyond what is standard. As an added benefit, many umbrella coverage plans extend their coverage to less common incidents and liabilities, such as false arrest, defamation, and others. This type of insurance may also assist in paying attorney fees.
Prenuptial Agreements
While many people treat prenuptial contracts as family law, these agreements are also a type of asset protection. Prenuptial agreements determine how assets are to be divided in the event of a divorce, which can protect valuable assets from being lost in divorce. Understanding how these contracts intersect with other asset protection plans can help strengthen the protection for these assets.
Combining Asset Protection Strategies
While each of these asset protection strategies is effective in its own right, this does little to answer the question of “what is asset protection?” Asset protection is more than simply picking one plan and leaving it alone. Asset protection is a long-term effort to provide excellent protection for valuable property. For large estates, a combination of these strategies can provide many unique benefits. An experienced estate planning lawyer in South Carolina can help optimize an asset protection plan, utilizing multiple forms of asset protection to multiply the benefits available for their clients.
Importance of South Carolina Law in Asset Protection
All of these strategies are important to understand, but preparing for each individual’s unique circumstances may require more than a rudimentary understanding of what asset protection is. Unique state laws in South Carolina, North Carolina, and Tennessee can influence what strategies are available in each state. Additionally, these same state laws may provide uniquely beneficial options that may be lesser known. Understanding the influence of South Carolina state laws on asset protection can help develop a solid and effective plan.
Speak with a South Carolina Estate Planning Lawyer Today
What is asset protection? Asset protection is a combination of effective asset management, legal understanding, and diversification. Understanding the various strategies available can help individuals optimize their estate plan to meet their needs and protect them from the claims of creditors and other liability issues. However, this process can be grueling and complex without the proper guidance and legal knowledge. A skilled South Carolina estate planning attorney from King Law Offices can help build an effective asset protection strategy. Schedule a consultation today by calling the office at (888) 748-5464.
