Oswego Asset Protection Lawyer: How to Protect Your Assets Against Liability Concerns?

 Posted on January 09, 2023 in Asset Protection & Wealth Preservation

Asset protection is a legal specialty, which is a combination of financial, retirement, and lawsuit planning to set up legal barriers to protect one’s family and business assets. A recession is coming, and lawsuits, taxes, and liability concerns will increase, which will threaten people’s family, individual, and business’s economic security. 

The best asset protection occurs prior to any incident or potential lawsuit has arisen. Advanced planning is not fraud and sets one’s assets up in a manner that maximizes asset protection. Asset protection is combined with estate planning strategies to help families and individuals achieve financial security. Middle-aged couples and individuals are increasingly aware of retirement planning. Smart retirement planning consists of asset protection and estate planning (when the situation meets the customer’s needs). 

How to Protect Your Assets Against Liability Concerns?

This article will discuss how to protect your assets against liability concerns and what legal instruments you should use. This article will discuss five (5) strategies designed to protect one’s assets from liability concerns. The first legal concept is the use of holding and subsidiary companies, which segregate each company or LLC into a separate entity. 

Holding and Subsidiary Companies

Holding and subsidiary business structure uses an operating company and a holding entity as an asset protection strategy. A holding company is an operating entity, which does not own assets directly. Rather, the operating company owns a holding entity, which owns the business or real estate assets. The use of a holding entity is vital because LLCs will be the owner and manager of the holding entity versus an individual. Operating an enterprise as a holding entity is important because it insulates a family’s assets from lawsuits. The two most popular business entities tend to be limited liability companies and corporations. Both have similar liability benefits and concerns. Accounting and tax issues often are the deciding factor of whether a limited liability company or a corporation is in the best interests of a person or family.

Using a holding company and subsidiary company helps eliminate liability concerns of small business owners and families. The operating entity operates the business activities, and its assets are vulnerable to these vendors, customers, and liability concerns. A person’s personal assets are protected because an individual (or husband and wife) never own and operate the day-to-day efforts of a holding company. The operating company is conducted by a business entity often an LLC.

Ownership of Real Estate Through Land Trust

A Private land trust is an excellent tool to protect one’s long-term real estate holdings. A private land trust offers several benefits. The first benefit is privacy (if set up in the correct manner). Most people fail to take full advantage of the privacy features of a land trust. The second benefit of a private land trust is protection against liens placed on properties. Lien protection is important because liens cannot be placed against land trusts if advanced planning has occurred. An LLC will own the land trust. 

A land trust holds legal title to real estate and the beneficial interest holder is an LLC. Land trust different with traditional real estate legal title because there is a title interest holder and a beneficiary interest. Most title issues for real estate combine legal and beneficial ownership. The benefit of separating the two is the legal title interest will read “Chicago Title Land Trust Company” versus a person’s individual name. The real estate tax bill will go to Chicago Title Land Trust (or applicable land trust company). Keeping a person’s name from public records is a key asset protection strategy.

Living Trust and Estate Tax Planning

A living trust is a powerful estate planning tool. Estate planning and asset protection should be combined to make an effective estate plan. An effective estate plan shall cause a smooth transition of assets upon incapacity or death. Combining an estate plan and asset protection plan provides solid estate planning goals and protects one’s assets from liability concerns. The two goals should work together to protect a family’s financial future.

A living trust avoids public disclosure and is a private document. A living trust is also known as a “family trust” or “grantor trust” or “revocable living trust.” A living trust is revocable and may be amended, unlike an irrevocable trust. An irrevocable trust is irrevocable and maximizes asset protection because one’s assets are outside of their control. An effective irrevocable trust strategy is important to protect assets from Medicaid or other creditors. Payment of life insurance may be transferred outside the scope of a person’s name by setting up an irrevocable life insurance trust. An irrevocable life insurance trust is a trust, which is primarily for the benefit of owning life insurance. Life insurance will pass outside of probate court and provides maximum asset protection because the assets will not be owned by the individual. Furthermore, an irrevocable life insurance trust or otherwise known as an “ILIT” minimizes estate taxation as well for the correct individual and families.

Protection for Money Markets and Other Accounts Should be Considered

An individual’s family wealth and assets are vulnerable to lawsuits when an individual gets a judgment against them. Certain business professionals are strongly aware of the need for asset protection such as physicians and businesspersons. The use of bankruptcy exemptions is limited in Illinois for certain assets. These bankruptcy exemptions offer limited protection of a personal residence and individual property exemptions. The personal property exemption or otherwise known as a “wildcard exemption” is limited to $4,000 in 2022. Any assets beyond $4,000 are vulnerable to seizure upon a judgment. Effective asset protection involves the use of cash value life insurance and retirement assets because they are protected under Illinois law. Hiring an Oswego Asset Protection Attorney is a wise decision to protect one’s assets from lawsuits, taxes, and other issues.

Oswego Asset Protection Attorney for Liability Planning and Asset Protection

Peace of Mind Asset Protection, LLC specializes in estate planning and asset protection for Kendall County and nearby residents. Whether you are a professional, business owner or a family person that wants to protect your assets, Peace of Mind Asset Protection, LLC can assist you. Set up an initial consultation by calling 630-882-2467 or filling out the online form.

Sources:

Using Holding Companies and Operating Companies To Protect Business Assets, https://wolterskluwer.com/en/expert-insights/using-holding-and-operating-companies-to protect-business-assets

https://www.ctlandtrust.com