Asset protection planning is a process by which a business, individual and/or family organizes their financial affairs in such a manner as to safeguard assets from the risk of exposure. The process of asset protection involves transferring the assets from an unprotected form of ownership to a protected form of ownership. The protected form can be one of many asset protection vehicles such as limited partnerships, corporations, certain kinds of trusts, limited liability companies and other such entities. Protecting assets can also entail the process of transferring vulnerable assets into exempt assets to the extent permitted by the individual states.
Asset protection planning is also an important step in the estate planning process, regardless of age, health, and wealth. This is because proper asset protection strategies can help ensure your surviving family and friends will have access to the financial support they may need while minimizing the potential stress and problems that may arise after you pass. Asset protection planning can also protect you and your assets while you are alive. Asset protection serves as a barrier between you and your creditors if you are getting sued, going through a divorce etc.
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