It’s amazing how many people work for years building up their assets only to suddenly lose them because they weren’t prepared, and protected, for divorce, lawsuits or bankruptcy. Even worse is that, when advised about asset protection, many consumers are reluctant to do anything about it, leaving themselves open to risk even while knowing the dangers.
Below are a number of common beliefs (or misbeliefs, if you will) that could possibly ruin you financially. Knowing about them will help you to avoid them and make some important financial decisions. Enjoy.
First, many people feel that if they are “lucky enough” to have a lot of wealth and assets, wanting to protect them is selfish. That couldn’t be further from the truth. Protecting your assets also safeguards many other people, including your family members, employees and tenants.
Some consumers believe that all they need is liability insurance, but let’s look at some facts. Fact 1 is that liability insurance will go sleep only will protect you if any claim you make doesn’t exceed your actual coverage. Fact 2 is that it’s possible that your insurer denies your claim and Fact 3 is that, in some cases, an insurance company will go bankrupt in the middle of a lawsuit. If any of these 3 things happen, your liability insurance isn’t going to be helpful, or protective.
Occasionally you’ll find a very naïve consumer who believes that, in general, most people can be trusted. With that in mind, they believe that asset protection simply isn’t necessary. After they’ve been through a nasty divorce or breakup of a partnership in business, and after it’s too late to protect their money, they find out that they were wrong.
Many believe that asset protection is only something that “rich people” need. The fact is that the vast majority of consumers aren’t very rich but what they do have, including, for example. a rental property, maybe a small business or a 401(k) retirement plan with $70,000 in it, are still valuable. If they lose those assets, they have absolutely nothing.
Then there are those consumers who believe that, as long as they never do anything wrong, why would they need asset protection? The fact is however that every day in the United States people with high morals and integrity, as well as a lot of money, are the targets of frivolous lawsuits. Even if these lawsuits don’t have merit and, eventually, are dismissed, a lot of time, energy and, you guessed it, money is wasted defending against them. In fact, some plaintiffs actually sue in the hopes that a defendant will be unwilling to go through all the hassle and expense of defending themselves and instead “settle out-of-court”.
Last, but certainly not least, of those who believe that asset protection is unethical or somehow “shady”. These people believe that those who use asset protection are simply trying to illegally hide their assets, something that couldn’t be further from the truth.
The simple fact is this; if you worked hard to become financially independent and successful, and have assets to show for it, protecting those assets is morally and ethically justified and also makes a lot of sense. Like a shelter from the storm, asset protection will shelter all those years of diligent hard work from any type of financial storm you might encounter.