Estate Planning
Asset Protection Attorney in Wayne, NJ
Asset protection planning is about making smart decisions now to safeguard your personal, business, and financial assets from potential loss due to lawsuits, creditors, or bankruptcies. This type of planning is especially important for professionals and business owners, as their personal assets can be at greater risk due to the nature of their work.
Why is Asset Protection Important?
Statistics show that lawsuits, divorces, and bankruptcies are common events that can significantly impact your financial well-being. While no one expects to face these challenges, the wealth you have built over a lifetime of work and investing could be vulnerable to sudden loss. Effective risk management strategies can protect your assets from these potential threats. Key strategies include exempting assets from creditor claims, creating legal entities to limit liability, and transferring risk through insurance.
Exempting Assets in New Jersey
Both state and federal laws offer exemptions that protect certain assets from creditor claims. However, it’s important to know that some states allow you to choose between state and federal exemptions, while others mandate the use of state exemptions only. In New Jersey, federal bankruptcy exemptions are not an option, so understanding state exemptions is crucial.
Once you identify the types of assets that are protected under applicable law, you may be able to enhance your protection by converting non-exempt assets into exempt assets. This strategic approach can help you maximize your asset protection.
Limiting Liability for Professionals and Business Owners
Many business owners choose to operate as sole proprietors due to the simplicity and lower costs. However, this structure does not offer liability protection. In a sole proprietorship, lawsuits against the business are essentially lawsuits against the owner’s personal assets.
To manage risk more effectively, business owners can form legal entities, such as Corporations or Limited Liability Companies (LLCs). Lawsuits against properly established and maintained entities are directed at the entity’s assets, not the owner’s personal assets. Choosing the right legal entity is critical for managing risk and protecting personal wealth.
Transferring Risk with Insurance
Insurance is a key element of asset protection. It’s important to regularly review your liability insurance program with your insurance provider. Check that your policies are current, coverage limits are sufficient, and deductibles are reasonable. Be aware of any potential loopholes in your coverage.
The purpose of insurance is to pay a manageable premium to transfer risks that you cannot afford to bear. Understanding which risks you retain and which you transfer is an essential part of effective asset protection planning.
Get Help with Asset Protection Planning
For personalized assistance with asset protection in Wayne, contact Attorney Benjamin D. Eckman. We can help you understand your options and implement strategies to protect your assets from potential threats.