Daily Real Estate News  |  July 17, 2006  |   Secure Wealth Where Others Can't Take It
Asset Protection, or placing money where it's safe from lawsuits or creditors, was once considered a shady practice. Now it's moving into the mainstream.

Some strategies:

• Segregate business and personal risks. Place businesses, including family businesses, inside a corporate shell such as a limited-liability company or a family limited partnership. If creditors go after your company because of a business problem, they will have a hard time taking any personal assets.
• Buy "umbrella insurance." One of the first lines of defense is to shift your risks to another entity, such as an insurance company. Umbrella insurance protects assets from personal-injury claims above the liability limits set by standard-issue home or auto policies.
• Maximize state exemptions. The laws governing protection of assets such as homes and insurance policies vary by state. In Florida and Texas, you can transfer your wealth into your home (building an addition, say, or paying off a mortgage), life insurance policy, annuity or retirement plan, all of which are generally exempt from creditors. In some states, married couples can title their property in a special way called "tenancy by the entirety," which can make it tough to reach for a creditor of one spouse.

More details about your state's laws are available on the Asset Protection Book Web site.

Source: The Wall Street Journal, Rachel Emma Silverman (07/15/2006)