Asset protection comes in many forms, and while there’s no “one size fits all” strategy for everyone’s needs, most strategies do contain common elements. The first thing to consider when protecting yourself from a lawsuit is determining where a lawsuit is likeliest to come from. Like building a medieval castle, we want to erect our strongest and tallest walls in the direction of our enemies.
Generally, our first layer of defense is to separate ourselves from our high liability assets, such as rental properties, heavy equipment, etc. By isolating these “dangerous” assets inside business entities, we separate ourselves from the liability they can create. In turn, should you be the target for a lawsuit, your business assets are protected from your personal liabilities.
Properly structured corporations and LLCs are the foundation of any legitimate asset protection strategy. Once your foundation is in place, you can begin building your castle fortress by implementing strategies that provide you privacy, tax minimization, asset diversification, encumbrances, estate planning, and so much more.