Acquiring more assets is rewarding, but it can also attract a lot of issues. 82% of respondents in a recent survey admitted that their wealth made them an attractive target for liability lawsuits. Aside from liability lawsuits, several other factors can cause you to lose your assets and wealth, especially in an ever-changing financial landscape. Therefore, protecting your assets and safeguarding your hard-earned wealth is paramount. Here are four things you can do to achieve this.
Build an emergency fund and purchase insurance coverage
An emergency fund is crucial for financial stability and safeguarding your assets. It should consist of three to six months’ worth of your living expenses, acting as a safety net in case of the unexpected. This way, you can avoid selling your assets and investments for cheap at unfavorable times. Aside from having an emergency fund, purchase insurance coverage to protect your assets from various risks. You can obtain different policies, like home, auto, health, and liability insurance, so feel free to consider this. These options can protect you financially in case of accidents, damages, or lawsuits. But assess your needs first to determine which coverage option is best for you.
Make a will
With a will, you can dictate how you want your estate to be distributed in your absence. It should clearly outline your wishes and specify the beneficiaries of your assets. This will prevent potential disputes and ensure your assets are distributed according to your intentions. A well-crafted will can also minimize estate taxes, avoid a time-consuming probate process, and provide a smooth transition of your assets to your loved ones, so keep this in mind.
Set up multiple entities
Some professions are considered high-risk when it comes to lawsuits. For instance, you can expect a high likelihood of being sued if you’re a surgeon, real estate agent, accountant, business owner, or lawyer. Setting up multiple entities can be a great way to protect your assets in this case, so feel free to consider this. For example, if you’re a surgeon but own a rental property, an interior design company, and a cafe, you should treat them as separate or individual legal entities. This way, no one can access your other assets in case of a lawsuit against you during your medical practice. This option may work well for fixed and tangible assets, but what about your investments and liquid assets? That’s where the next tip comes in.
Consider offshore asset protection
If you own liquid assets, an offshore asset protection solution can secure your valuables from an overzealous local judicial system. You can place your funds in an offshore protection trust like a safe international financial institution outside the reach of a local court. Despite the bad rap and controversy surrounding going offshore, this move is perfectly legal. Plus, it’s very effective when done right, so feel free to consider this. Only ensure that you haven’t acquired your liquid assets through illegal means, as this could be detrimental.