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Can I Protect My Assets from Creditors?

Can I Protect My Assets from Creditors

A comprehensive guide on how to protect your assets.

At Heritage Law Office, our experienced estate planning attorneys will help you navigate the complex world of asset protection and provide you with the best options tailored to your needs. Contact us online or at 414-253-8500 to schedule a free consultation today.

Asset Protection Strategies

Asset protection strategies aim to safeguard your assets from potential creditors and lawsuits. In this section, we will discuss several options available.

1. Utilize Insurance

Insurance is often the first line of defense against potential claims. Having adequate insurance coverage, such as homeowner's insurance, auto insurance, and umbrella policies, can help protect your assets from liability claims.

2. Establish a Trust

A trust is a legal arrangement that allows you to transfer your assets to a trustee, who manages them for the benefit of your chosen beneficiaries. Trusts can be a valuable tool for asset protection.

Irrevocable Trusts

Irrevocable trusts cannot be altered or revoked once established. By placing assets into an irrevocable trust, you relinquish control over them, making it more difficult for creditors to reach them.

Revocable Trusts

Revocable trusts, also known as living trusts, can be changed or revoked during your lifetime. While they are generally not as effective for asset protection purposes as irrevocable trusts, they can still provide some protection in certain situations, such as in the case of a surviving spouse's creditors.

3. Wisconsin Homestead Exemption

The Wisconsin Homestead Exemption protects a certain amount of equity in your primary residence from creditors. Under this exemption, up to $75,000 of equity in your home is exempt from creditor claims for a single homeowner, and up to $150,000 for a married couple.

4. Retirement Accounts

Retirement accounts, such as 401(k) plans and IRAs, are generally protected from creditors under federal and state law. In Wisconsin, the protections for retirement accounts are quite strong, making them an essential part of any asset protection strategy.

5. Limited Liability Companies (LLCs) and Family Limited Partnerships (FLPs)

LLCs and FLPs are legal entities that can be used to separate your personal assets from those of your business. By placing your business and investment assets in an LLC or FLP, you can shield them from personal creditors.

6. Prenuptial and Postnuptial Agreements

Prenuptial and postnuptial agreements are contracts between spouses that outline how assets will be divided in the event of a divorce or death. These agreements can help protect your assets from your spouse's creditors.

Planning for Future Asset Protection in Wisconsin

Proactive planning is key to effective asset protection. Here are some tips to help you get started:

  1. Assess your risk: Determine the level of risk you face from potential creditors, and prioritize your asset protection strategies accordingly.
  2. Consult with an experienced attorney: An attorney knowledgeable in estate planning and asset protection can help you develop a comprehensive strategy that addresses your unique needs and goals.
  3. Stay up-to-date with the law: Asset protection laws can change over time, so it is essential to stay informed and adjust your strategies as needed.

Contact a Knowledgeable Asset Protection Attorney in Wisconsin

If you are looking to protect your assets from creditors, contact our experienced attorneys at Heritage Law Office. We will help you develop a tailored asset protection strategy that meets your specific needs. You can reach us by using the online form or calling us directly at 414-253-8500.

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Frequently Asked Questions (FAQs)

1. How does asset protection work?

Asset protection involves the use of legal strategies to convert personal wealth into assets that are out of reach of potential creditors. It's not about evading responsibilities, rather, it is a legitimate method to protect yourself from the unpredictable hazards of business life like lawsuits, bankruptcy, and divorce.

2. Is asset protection legal?

Absolutely. Asset protection is a perfectly legal process, although it must be performed with the aid of experienced legal professionals to ensure all actions comply with relevant laws. Missteps can lead to serious consequences, including allegations of fraudulent transfers.

3. When should I start thinking about asset protection?

The best time to start asset protection is before a liability arises, as any actions taken after the fact might be deemed fraudulent transfers. Consult with a legal professional as soon as you anticipate potential risks to your assets.

4. What is the difference between revocable and irrevocable trusts?

Revocable trusts, also known as living trusts, are flexible and can be altered or cancelled during the trustor's lifetime. However, they generally offer less protection against creditors. Irrevocable trusts, on the other hand, cannot be changed once established, which makes the assets within them less accessible to creditors.

5. Are all my assets protected in a bankruptcy?

Not all assets are protected in bankruptcy. Some assets, like retirement accounts and homesteaded property, may have certain protections. However, the specifics of what is protected can vary by state and by your circumstances. For a comprehensive understanding of what assets are safe in a bankruptcy, it's recommended to seek professional advice.

Contact Us Today

For a comprehensive plan that will meet your needs or the needs of a loved one, contact us today. Located in Downtown Milwaukee, we serve Milwaukee County, surrounding communities, and to clients across Wisconsin, Minnesota, Illinois, and California.