Clients often ask what steps can be done to protect their assets. My response is always: “what type of asset protection are you interested in?” Most clients aren’t quite sure how to respond as they are unaware that there are different types of asset protection available. The 3 most common types of asset protection I help clients with are:
- Asset Protection from Medi-Cal. Medi-Cal is a health program is the California version of Medicaid. In most cases, Medi-Cal provides very valuable care for those with limited financial resources. This is often the case with elderly individuals who go into a nursing home. Since nursing home care is expensive (upwards of $6,000 to $8,500 dollars per month), elderly individuals are often very interested in steps they can take to protect some of their assets for their loved ones. The most common tool we use for this is called a Medicaid Asset Protection (MAP) Trust. One common use of a MAP Trust is to protect real estate so that it passes to a client’s children instead of having a lien placed on it by Medicaid. Other strategies can also be used but only if you act before they need skilled nursing home care.
- Asset Protection from Business Liabilities. Most business owners have the fear of “What if…” “What if my employee does something and as a result I am sued?” “What if my product injures someone?” “What if a customer is injured on my property?” The answer to those “What ifs” is to plan. Part of that planning is certainly adequate liability insurance. Yet, another part is structuring your business (businesses) the correct way to minimize liability. Whether your business is an LLC, S-Corp, or C-Corp, there are steps you can take to minimize an owner’s personal liability for business incidents.
- Asset Protection from Lawsuits. Almost daily you hear about someone getting sued. Sometimes the claims have merit. Other times the claims are frivolous and a waste of time, energy, and money. Planning ahead is important to minimize your personal liability. Especially if you are in a higher risk profession (doctor, pharmacist, lawyer, etc.), planning today is critical for asset protection tomorrow. This planning can range from the simple (titling assets or establishing LLCs) to the very complex (offshore trusts with professional trust protectors).
Protecting assets is possible, so long as you ask the right questions and get started before
you need it. There is no silver bullet for asset protection. Instead, think of it as layers of protection. Get started building your layers of asset protection today.