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Protecting Myself

Safeguarding assets

Protecting your wealth and financial future

While you may be focused on accumulating assets, safeguarding them is just as important. Using lawful strategies can help you preserve as much of your estate as possible for yourself and eventually your heirs.

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Better safe than sorry

Each year, thousands find themselves in the midst of divorce or debt proceedings or other civil suits that threaten their financial security. Fortunately, there are various strategies you can implement to help protect against claims. Be sure to consider the expense and extent of the strategy, as well as the ease of implementation and administration. Your team of advisors can help you select the right one(s). You’ll want to balance the level of protection with your ability to still access your assets.

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Safeguarding strategies

Basic liability insurance is essential. It provides limited protection against the risk of loss to your home, car and other vehicles. When you purchase coverage, be sure to review what — and how much — the policy covers.

Homeowners or renter’s insurance can protect against loss or damage due to fire, theft or natural disaster. It can also include liability coverage for injuries or property damage to other people.

Car insurance protects your vehicle, passengers and other individuals or property if involved in an accident.

Boat or aircraft insurance covers your recreational vehicle, passengers and any other individuals or property if involved in an accident.

Insurance that goes above and beyond

You may want to consider additional insurance for further protection.

Excess liability

Pays insurance when the underlying limits of a certain policy (for example, an auto policy that caps out at $300,000 per accident) have been reached.

Umbrella

Helps protect you from major claims and lawsuits. More broadly applicable against legal claims.

Employment practices

Provides coverage against claims made by employees alleging discrimination, wrongful termination or harassment.

Malpractice

Professional liability insurance protects from patients/clients who sue based on negligent or intentionally harmful treatment decisions.

Nonprofit officers

Covers defense costs, settlements and judgments from lawsuits brought against charitable organizations, board members and officers.

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The law is on your side

Certain laws provide protection over specific types of assets. These can vary state to state, so you’ll want to check with your attorney regarding what applies to you. In general, you should be afforded some legal protection for these types of assets:

Assets held in tenancy-by-the-entirety
This is a form of joint ownership that typically only applies to married couples (and in some states, civil unions). It provides protection to one spouse from creditors of the other.

Primary residence
Homestead exemption laws can protect a specified homeowner's equity amount or even the entire value of a primary residence.

Retirement plans
Federal law exempts qualified plans and plan assets rolled into an Individual Retirement Account (IRA) from being included as part of bankruptcy claims.

Other strategies

Consider transferring title to your assets to a closely held entity, such as:

  • FLP (Family Limited Partnership) or
  • LLC (Limited Liability Company)

These offer enhanced creditor protections not otherwise available when assets are held in your individual name. In addition, consider making gifts of some of your assets, either outright to your spouse or other family members or in trust for the benefit of yourself, your spouse and/or other family members. To learn more about trusts, visit Trust Basics.

Things to remember

  • Take steps to safeguard what you have against future risks
  • Think about implementing one or more of the strategies outlined above
  • Consider the expense, ease of administering each strategy and the protection it offers
  • Contact an insurance professional or attorney for additional guidance
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