Interesting fact – professionals lose more money through divorce than they do through lawsuits related to their practice.
So let’s talk about protecting assets from soon-to-be ex-spouses, and other unfriendly people. There are some simple steps that can be taken. Asset protection doesn’t always have to involve complicated trusts, insurance strategies or off-shore trusts.
Increase your personal umbrella insurance policy. The amount depends on your net worth and your acceptable risk level. For most professionals, $5 to $10 million is about right.
Gift your 18 year old child his or her car, and let the child insure it. If your child causes a wreck, the injured party is going to look for anyone with assets to sue. Remember, an injured party isn’t limited to the recovering just the amount of insurance on the car or driver. If you don’t own the car, then you and your assets are out of the chain of responsibility.
Have a written marital agreement that divides assets, and put the assets into separate living trusts (one for each spouse). This will usually protect your spouse’s trust assets from your liability. It will also, of course, make a division of property much clearer in the event of a divorce.
The key is to make the planning effort now, before you are in crisis. Give us a call if you would like to talk about your situation.