Understanding when your assets need protection

On Behalf of | Jan 12, 2022 | Family Law | 0 comments

People in Oregon who have worked hard to build assets and accumulate wealth need asset protection. People don’t need to have substantial debts to have potential lawsuits filed against them. The best time for people to take steps to protect their assets is before any claim is threatened or filed. Asset protection can be included as a part of the estate planning process. Here is some information about when and why asset protection might be needed.

Vulnerability of assets

Multiple parties could potentially file claims to try to seize assets. Wealthy people are frequently targeted by others because of their high net worth. People working in certain occupations also have a higher risk of being sued and being exposed to potential liability, including doctors, lawyers, and others. People’s assets can also be at risk if their marriages end, and asset protection might be used to protect them as an alternative to entering into a prenuptial agreement. Once a person passes away, their assets might be at greater risk. Creditors might file claims against the person’s estate and try to get the assets the person intended to leave to their loved ones.

Methods of asset protection

There are several different ways to protect assets. One way is to create a trust and fund it with the assets that need protection. An irrevocable trust allows people to transfer ownership of their assets to the trust. Since they no longer have control over the assets held by the trust, creditors and others will not be able to reach them. Another way to protect assets is to place them in retirement accounts. Under Oregon law, 401(k), 403(b), 457(b), traditional IRAs, Roth IRAs, and pensions are all protected from execution by creditors.

People should also make sure that they have sufficient insurance coverage to protect them from personal liability. Some of the types of insurance that people might consider include liability coverage, business liability coverage, umbrella policies, professional malpractice insurance, and others. Finally, forming an LLC and transferring assets to it might help to protect them.