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Risk Management: The Key to Protecting Your Assets

Making money and creating the wealth and security you seek is only half the battle – keeping it is the other half. To put it bluntly, even one lawsuit can result in you losing a considerable chunk of your assets, such as your home, car, and the money in your checking, savings, and investment accounts. There's also the issue of legal fees, which can also siphon a substantial amount of your wealth.

As any risk advisor will tell you, the key to protecting your assets is doing it in advance. Risk management is not a passive strategy. It involves identifying, analyzing, and mitigating the uncertain to ensure your assets won't be lost in a lawsuit. It's crucial to understand the laws designed to shield your assets, so you can take the necessary measures to protect your savings,

In Florida, there are several risk management vehicles you can take to protect your assets from lawsuits, bankruptcy, and creditors.

Asset Protection Through Risk Management

The United States is awash in lawsuits. Anyone can get sued – even you. That’s why it’s vital to take some defensive measures that make it difficult for creditors to seize your assets if you have a judgment entered against you.

Likewise, it’s just as important to minimize legal risks in your business and personal dealings. For instance, it’s always a good idea to have a lawyer review any business agreements before signing a contract. A few dollars spent on attorney fees could save you a fortune in the long run.

Sound business practices can help you reduce potential threats to your livelihood, helping you:

  • Identify relevant risks in terms of likelihood and impact
  • Respond to the risks that matter
  • Safeguard your business and personal assets
  • Protect your current and future wealth
  • Feel more secure with the peace of mind that comes from knowing there’s a fallback

Risk is a fact of life, and it can have a drastic impact on your net worth. Risk management typically involves purchasing health, life, and disability insurance. However, you should take it a step further by repositioning your assets and taking advantage of other protections available under the law.

How to Keep Your Assets Safe

The approaches to shielding your assets are almost as varied as the assets themselves, which is why you should work with an experienced attorney to create an asset protection plan that’s unique to your situation.

The following are just a few of the different protective strategies available to you in the State of Florida:

  • Florida Homestead – Your primary residence can be completely protected from unsecured creditors. While there’s no monetary limit on the homestead exemption, the extent to which your property is protected is subject to acreage limitations.

  • Tenants by the Entireties – Assets held by a married couple in this format cannot be reached by creditors when the judgment is separate.

  • Domestic Asset Protection Trusts – Protects your wealth from creditors but keep in mind that the trust may be forced to pay child support, alimony, and other legal obligations.

  • Estate Planning Trusts – Protect the beneficiaries’ interests from creditors.

  • Use Business Entities – It's essential to keep your personal and business assets from one another. Holding assets provides a greater degree of protection from creditors and lawsuits.

Florida Statutes also exempt several assets from creditor execution, including:

  • Qualified retirement assets, including traditional retirement plans and Roth IRAs. Have your attorney confirm that your assets are in the correct format to qualify for this protection.
  • The cash value of life insurance benefits and other annuities
  • Disability income
  • Prepaid college plans
  • Social security and unemployment benefits
  • Medical savings accounts and other health aids

There's a common misconception that asset protection is only for the uber-wealthy, but this couldn't be further from the truth. It’s not just a tool for the wealthy - everyone should have an asset protection plan in place.

It’s never too late to engage in some asset protection. You can do so even after a lawsuit has been filed. Asset protection strategies work best when implemented before any legal problems can occur. However, asset protection tools put in place under the threat of litigation might not cure all your legal problems.

Advanced risk management puts you in a better position because you can input several layers of protection to safeguard your wealth from all potential risks.

Get Expert Advice on Risk Management and Asset Protection Today

Too many people treat risk management and asset protection as an afterthought. When it comes to safeguarding your assets, it’s best to plan for the worst to ensure you don’t lose what you’ve spent years building.

Don't wait until there's a judgment against you. Consult with an attorney familiar with the laws in your state to help you craft an asset protection plan that's best suited to your needs.

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