What is Asset Protection?

Asset protection essentially does what it says on the tin, and it basically means that you are finding ways to protect your assets – finances, properties and belongings – from situations such as divorce or bankruptcy where you might find yourself having to give away or give up some of your assets otherwise.

In the case of a bankruptcy for instance, you can find the bank seizing your belongings in order to help you pay off loans. This isn’t something that you have a say in however, and this will have been previously agreed in the terms of the loan. Likewise if you should go through a divorce and haven’t signed a prenuptial agreement, then you might find that your ex-partners lawyers are able to force you to part with some of your hard earned cash.

Of course in these scenarios it might only be fair that you pay back your debts anyway that you can, or that you enable your partner to support themselves. That said you still need to ensure that you have something to fall back on and that you have some money in order to live off once all is said and done, and this is where asset protection comes in.

How to Go About Asset Protection

In order to protect your assets you will need to get legal help in most cases. This is a highly complex issue and just what the banks and divorcees are entitled to will ultimately come down to matters of the law. It is not legal for instance to used asset protection in order to try and escape your debts (due to ‘UFTA’ laws – or the ‘uniform fraudulent transfer act’), and as this is a difficult matter to define it’s best to get the help of someone who knows what they’re talking about.

They will then be able to recommend various different strategies for you to protect your assets which will likely include something like a Swiss annuity. A Swiss annuity is basically an offshore account held in Switzerland in which you basically pay a certain amount of money up front with the agreement that you will then receive a number of monthly payments for instance which will ultimately come to the same value or greater compared to the amount you paid in. The bank is able to invest the money and so they make a profit, and because the money is both in another country and not technically in your possession this is usually a safe form of asset protection.

There are many other kinds of asset protection too. For instance LLCs and limited partnerships. Otherwise you might decide to take more basic measures to protect your assets which you can accomplish by investing in art or instance and then ‘giving’ that painting to a friend. Or you might take out some form of fixed term life insurance which would once again mean that you didn’t have the money in your accounts. One form of this is an ‘Individual Retirement Arrangement’ or IRA which is basically a form of life insurance that comes with added asset protection.

This guest post was written by Jen. She likes to write about saving money, frugal living and finance management. Her work with Graham Benson Bankruptcy Attorney in Belleville Illinois has helped her learn a lot about bankruptcy and asset protection.