Asset Protection Strategies

Effective Asset Protection Strategies You Need to Know

 Building and accruing assets to fortify your retirement is important, but just as vital is taking the necessary steps to protect those hard-earned assets. Utilizing effective asset protection strategies provides a proverbial shield around your investments, businesses, property, savings accounts, stocks, and so forth. 

Why Asset Protection is Important

Effective asset protection strategies help ensure your loved ones will be able to access the financial resources they may need to survive and thrive while simultaneously minimizing the potential anxiety and stress that could arise in the wake of your passing. In addition, proper asset protection in Florida and elsewhere can help shield you from potential creditors and lawsuits.

Key Asset Protection Strategies

  1.  Invest in Different Forms of Insurance - When it comes to asset protection, one of the most important and effective tools is investing properly in different forms of insurance. The types of insurance you should consider purchasing to protect you and your hard-earned assets include the following: personal disability income insurance, business workers’ compensation insurance, homeowner’s insurance, automobile insurance, life insurance, and malpractice insurance (if you are a professional). 
  2.  Invest in Qualified Retirement Plans and Individual Retirement Accounts - If you do not have a retirement account or only passively invest into a retirement account, you are missing out on a great tool for protecting your assets. When you open and invest in a qualified retirement plan or Individual Retirement Account (IRA), you are both saving for your long-term retirement and effectively shielding your assets from potential creditors. This is due to a federal law enacted in 1974 known as the Employment Retirement Income and Security Act of 1974 (ERISA). ERISA provides incredible creditor protection from both your creditors and creditors of your employer.
  3.  Create and Utilize an Irrevocable Trust (a/k/a the Asset Protection Trust) - When you place assets into an irrevocable trust, they will be protected from creditors and other threats so long as the transferor is not a potential beneficiary of the trust. Under an irrevocable trust agreement, the grantor transfers assets to a trustee and directs the trustee on how to control the trust by setting forth directives in the trust document.
  4.  Establish and Invest in a 529 College Savings Account - An amazing asset protection tool is the 529 college savings account. This is especially true for asset protection in Florida. This is due to a state law that stipulates funds paid into, or out of, the Florida Prepaid College plan (i.e., the Florida 529) are not subject to attachment, garnishment, or legal proceedings in favor of any creditor of the purchaser of the beneficiary of a plan. This is why a 529 account is an effective way to provide a benefit to your children or grandchildren while also enjoying strong creditor protection.
  5.  Title Property as Tenants by the Entirety - If you are married and own a home, make sure it is titled as Tenants by the Entirety. Why? Because Florida law recognizes this type of tenancy as a form of property ownership for both real and personal property. As a result, when the property is titled as Tenants by the Entirety, spouses are considered to be “one person” under the law. Therefore, a creditor of only one spouse cannot attach to property titled as Tenant by the Entirety in order to satisfy a claim or judgment. The only exception to this rule is if the creditor is the IRS.
  6.  Utilize Annuities - Asset protection in Florida particularly should include the use of annuity contracts. Why? Because there is a state law on the books that provides creditor protection for the proceeds of an annuity contract. However, this protection only applies when annuity payments are independent and not commingled with other assets. This is extremely important because once an annuity payment becomes commingled with other assets, the annuity may be subject to creditor attachment.

Connect with Your Financial Advisor Today

Wherever you are in the process of protecting your assets, it is important to seek out and utilize professional legal counsel to ensure you are complying with all relevant state and federal laws.

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Connect with Oxford Advisory Group today to discuss strategy options that work for you, or schedule a meeting with us to learn more. 


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