To a lot of people, asset protection trusts sound like they are only for people with significant assets or wealth. Does the average person need to have an asset protection trust? The answer may surprise you. The truth is that there are a lot of different reasons that a person may seek to protect his or her assets. Everyone’s situation is different. To better understand asset protection and whether you need an asset protection trust, your safest option is to speak with an estate attorney, in advance. Here are the top three reasons you may need asset protection.
You Face Lawsuits
Some people face lawsuits more often than others. This is especially true if you are in an occupation that has a lot of liability to your clients. For instance, financial advisors, lawyers and doctors may be subject to lawsuits from clients or patients. If this is the case, then you will want to have your assets protected, just in case a lawsuit occurs. Not only will you have legal fees to deal with, but if you lose, you could owe a substantial amount of money.
You Have Excessive Debt
Excessive debt can make it feel like you are drowning and unable to get ahead. If you are behind on your credit card payments or other debts, then creditors can look into your assets for collection. If you have an asset protection trust, then those creditors cannot access all of your assets. If you have a lot of debt, then this could be a better route for you.
You Have Significant Wealth
When you have significant wealth, you may want to protect it. This is especially important for those who may be coming into a lot of money. If you have an inheritance, for instance, but you also have a lot of debt, you may want an asset protection trust to keep creditors from touching your inheritance. While you do not have to have significant wealth to need an asset protection trust, you should have an asset protection trust when you have significant wealth.
These are not the only instances where a person may find that he or she needs asset protection. In fact, there are a lot of different circumstances that may dictate asset protection as a viable option. If you are worried about your assets for any reason, then you may have a valid circumstance to set up an asset protection trust. For more information on asset protection, consult with an estate planning lawyer.