Protecting your assets

The term “asset protection” has many connotations. For most people it means shielding assets from claims of creditors. Because we live in a very litigious society, it’s probably wise to consider creating a minimum level of wealth that no one can take away from you.


There are essentially three different ways to protect assets: 1) transferring assets out of your name; 2) transferring assets out of a collectible jurisdiction; and 3) converting assets to exempt assets.
For Florida residents, the easiest way to create high levels of asset protection is to own exempt assets. In Florida, one’s primary residence is protected from claims of creditors. Additionally, retirement accounts are also protected. Finally, Florida residents can own unlimited amounts of annuities and cash value life insurance that will be totally exempt from the claims of creditors.


Many people own assets such as real estate and closely held businesses that cannot be easily converted to exempt assets. They can create both asset protection and prudent estate planning by transferring ownership of these assets to an irrevocable trust. Creditors can’t reach the assets you place in an irrevocable trust because they no longer belong to you. Obviously, for most people, the thought of giving assets away is not appealing. Yet all is not lost because there are techniques available to maintain a good amount of control over both the assets and the income generated inside the irrevocable trust.


Finally, for an additional layer of protection, some people use trusts that are set up offshore in foreign countries with foreign trustees that American courts have no jurisdiction over. Therefore, even if a creditor obtains a judgment against you, they wouldn’t necessarily have a way to collect on it. If you are interested in asset protection, it’s important to consult with an attorney before you have any creditors because once you have creditors, it becomes a lot more difficult to protect one’s assets.


Keith Singer

Keith Singer, a well-known financial advisor in Florida, is both a CERTIFIED FINANCIAL PLANNER™ (CFP®) practitioner and a licensed Florida attorney.

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