Candlestick Trading Blog
Asset Protection – Are You Protected? So you managed to build a strong portfolio? You perform asset allocation successfully and through portfolio management, you have managed to achieve and can maintain portfolio diversification. You invested in your education and now your developed investment strategies have finally paid off! Now you need to protect your investments through asset protection. What is asset protection? It can be referred to as the debtor-creditor law and includes a set of legal techniques that deals with protection of assets of the individual and protection for business entities from civil money judgments. Asset protection involves planning the application of a series of lawful techniques designed to defer creditors or to make it difficult for future creditors to get a hold of your assets. This investing advice is a concept that you may want to seek profession guidance on. When developing your strategy for asset protection there are several factors to consider. You need to consider the type of assets you own (bonds, dividend paying stocks), your total net worth, and most importantly your degree of exposure to risk of liability. Others factors to consider may include the aggressiveness and intelligence of the creditor going after your assets and the timing of the claim or lawsuit. It is preferable for investors to engage in asset protection planning before there is any need for it. This should happen in addition to defensive investing which should occur first. The concept of asset protection is based on the principle that the majority of assets owned by a person can be reached by a creditor. The goal is to remove assets from a debtor’s legal ownership while still maintaining control and ownership that is beneficial. There is a very hard line between “legal” asset protection planning and criminal actions taken to defraud creditors. Many investors require the use of an attorney to walk them through the process in order to understand legal implications and restrictions and in order to avoid huge investing errors. Asset protection often includes the setting up of trusts, limited partnerships, and/or offshore entities to hold legal title to your assets when long term investing. There are dozens of different asset protection structures in use today for those who participate in trading and investing. An example of one includes the protection of a personal residence. There are many options some of which may include the following: 1) Transferring ownership to an irrevocable trust 2) The transferring of ownership to a living trust with a generic name. 3) Recording a naked deed of trust 4) Sale of the residence Assets that are owned by a debtor through a legal entity are not deemed to be owned by the debtor due to the fact that legal entities have separate juridical existence. Keep in mind however, that if the debtor own assets through a corporation (shareholder), those shares of stock can be seized by the creditor, possibly giving them access to the corporation’s assets and control of the corporation! Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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