Asset Protection Strategies

Asset protection is a crucial consideration, especially for high-liability individuals like officers of companies or physicians. While on-the-job liabilities are often covered by insurance, off-the-job protection varies by state. Generally, assets in plans like 401(k)s, IRAs, and 529 plans have strong protections against lawsuits. However, for excess income, non-qualified accounts (e.g., brokerage accounts) come into play. Proper titling, like tenancy by the entirety, can safeguard assets in some states, but it’s crucial to tailor your protection strategy based on your profession, location, and financial situation to secure your savings and achieve your long-term goals.

Video Transcript

One often question we receive is around asset protection. What happens if I am in a car wreck? What happens if someone slips and falls on my sidewalk on the job? Off the job. What I want to focus on is off the job.

Typically, if you’re an officer of a. Company or if you’re a physician have a high liability, there’s going to be certain insurances that cover on the job. Circumstances off the job. However, in most states, and I say.

Most states, not every state is the same. And we obviously need to consult with an attorney specific to the state that you live in. But just in generalities, there’s strong protections. Around 401 plans, IRA plans, 529 plans, Sep IRAs, insurance, cash value that’s held.

Inside of insurance contract. So most of these things, for example, 401K, IRA, as long as you max that out every year in generality, those are going to have very strong protections. Meaning if you’re in a car wreck or something happens off the job and someone sues you, usually this money is off the table, or a good portion of it is off the table if you are found at fault for a lawsuit.

So for our higher income earning clients, however, the IRS really limits you on. What you can put into a 401K or IRA. So usually an excess or overflow of money goes into what’s called a non qualified account.

So non qualified account would just be like a savings account, but instead you’re investing in a brokerage account, which would usually hold stocks or mutual funds or ETFs. And this is really important to get the Titling right.

Some states recognize tenancy by the entirety, which means if you’re married and if one spouse is in a claim and the other spouse is not, usually that money is protected. Whereas if it’s held joint with rights of survivorship, then in some states half of the money would not be protected if you’re found at fault.

So usually getting the Titling right is a good step in asset protection strategies. If you’re in a state that doesn’t. Recognize tenancy by the entirety and we’re talking about a regular brokerage taxable account.

And let’s say one spouse is a physician, the other spouse is staying at home with kids. Then holding some of the taxable money in the spouse that doesn’t work may provide higher protections than the spouse that is working and traveling back and forth and in a higher risk position on a day to day.

Ultimately, asset protection is very important to protect your hard earned assets that you’ve saved for your whole life and to reach your goals. Make sure money is there for funding your kids college.

Make sure that your family is secure. If an emergency occurs, eventually you’re able to turn the light on where you’re working because you want to, not because you have to. Asset protection is a very important part of this, and it’s an individualized plan based upon what you do, where you live, and what you have.

So this needs to be carefully analyzed, and we look forward to working together to make sure that your asset protection plan is as strong as possible.

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