Five of the Best Asset Protection Methods in Virginia
During these uncertain financial times, many Americans are concerned with protecting their assets. When markets are fluctuating, and the future is unknown, asset protection is incredibly important. Making a plan to protect your assets before a crisis happens to you and your family can help you protect your future. There are several strategies Virginia residents can use to protect their assets from divorce, lawsuits and judgments, and creditors. The following asset protection methods will help you protect your valuable assets and have peace of mind.
Use an LLC
One of the most popular asset protection methods in Virginia is to create a limited liability company (LLC). Many of our clients use LLCs to protect their personal assets, in case someone sues their business. If you own a business, you can also create an LLC to protect your business’s assets. Limited liability companies are business entities that are not corporate. All of the limited liability corporation members enjoy limited liability protection from creditors and legal judgments against them.
When you establish a limited liability company, you have the freedom to set up your company as you choose. You or you and your fellow members can manage and control the company, depending on how you set up the LLC ownership. Limited liability companies are relatively easy to administer and low cost compared to corporations’ legal business structure. Establishing an LLC also gives you several different taxation options. You can seek a more beneficial tax plan and keep more assets by using an LLC.
Establish an Asset Protection Trust
Creating a trust to protect your assets has become extremely popular in Virginia. The best time to protect your assets from a lawsuit, creditors, bankruptcy, or divorce, is to set up a trust and transfer the ownership of your assets to the trust itself. Doing so could mean the difference between costly litigation and quickly settling out of court should you be involved in a lawsuit. As of 2012, Virginia residents can use domestic asset protection trusts or qualified self-settled spendthrift trusts. Virginia joined 12 additional states by permitting these types of trusts.
These trusts are compelling when an individual works in a profession with a high likelihood of lawsuits, such as doctors, building contractors, or even attorneys. These types of trusts offer legal protection against present creditors after a five-year transition period and future creditors. During the five-year transition period, any potential creditors can still bring claims against assets transferred into the trust, but once that five-year time has elapsed, your assets will be protected.
Domestic asset protection trusts must meet multiple legal requirements in order to be valid. First, they must be irrevocable and created during your lifetime, making them inter-vivos trusts. The trust also needs to name at least one beneficiary other than the person creating the trust, also known as the settlor. These trusts are governed by Virginia law, need to include a spendthrift trust provision, and must meet multiple other requirements.
If you are considering creating one of these unique types of trust to protect your assets, you will benefit greatly from the help and advice of an experienced business lawyer. Your lawyer can make sure that your trust is set up correctly and that it meets all of the multiple requirements to be valid under Virginia law.
Create a Valid Estate Plan
Surprisingly, over half of all Americans do not have a valid estate plan set up. A study from 2017 showed that only 42% of adults in the United States currently have any type of estate planning documents, such as a living trust or will set up. For those Americans with children under the age of 18, only 36% have a plan for the end of their life in place. Many of us do not like to consider deaths in the future. Or, the thought of taking time to engage in estate planning can seem overwhelming.
However, after working hard for years, an estate plan can help ensure that your hard-earned assets will go to your chosen beneficiaries after you pass away. If you do not have an estate plan in place, you risk the state of Virginia taking control of your assets and distributing them to people through Virginia’s intestacy laws. Additionally, estate planning attorneys can help you set up an estate plan to minimize your tax liability, allowing your estate to control more of your assets.
Many people do not realize that an important part of estate planning is long-term care planning. Nursing homes are costly, some costing as much as $10,000 a month. An estate planning lawyer can help you create a plan to qualify for Medicaid should you need long-term nursing care, while protecting your assets.
Keep Your Financial Status Private
If you have significant assets, or you own a business that has significant assets, there are steps you can take to make sure that your financial status remains private. In many cases, when a potential litigant discovers that you own significant property, you can become a target for frivolous litigation. By having your employees sign confidentiality agreements, you can protect any information that might get loose and put your assets at risk.
Hire an Experienced Lawyer
The best way to protect your assets is to use a multi-pronged approach. It is not enough to just do one of these five steps; instead, you need a comprehensive plan to protect your assets from creditors, lawsuits, and other potentially costly financial situations. The legal team and staff at Fox & Moghul, Attorneys at Law, have the experience and knowledge needed to help you put together a comprehensive asset protection strategy. Do not leave your financial future to chance. Contact us today to schedule your initial consultation.