After you spend a lifetime building a career and growing your portfolio, you want to ensure that your assets are protected and that you have strategies to safeguard your business investments, real estate, cryptocurrency, artwork collections, jewelry, and savings. When you’ve invested wisely to provide for your family after your death, the last thing you want is for your wealth to be threatened by a lawsuit, creditor claim, or divorce. One lawsuit can jeopardize your earnings and financial standing.
The knowledgeable estate planning attorneys at Landskind & Ricaforte Law Group, P.C. know that you want to structure your assets in a way that keeps them safe from outside predators, and we have powerful legal tools designed to protect your estate without crossing ethical or legal lines. Here, we discuss ways to protect your legacy while staying compliant with New York law.
Why New Yorkers Need Asset Protection Strategies
Because New York is an extremely litigious state, people who’ve grown their financial canvas face a constant risk of lawsuits that can unravel years of wealth building. Those who are worth $2–5 million are vulnerable and can be targets for lawsuits, and in one legal suit, they could lose everything. Common threats to your assets include the following:
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- Business liability. If you own a business that employs workers or you are in a business with a partner, it only takes one disgruntled employee, dissatisfied client, or unhappy associate to bring on a lawsuit.
- Personal injury and premises liability. If you own or manage the building where your business is located, accidents involving your property can prompt a lawsuit. A client’s slip and fall on the stairs or a slippery patch of flooring could bring about high-dollar claims. So, it’s important to have legal protections in place.
- Family conflict and divorce. Without proactive planning, a divorce can derail your legacy, and family disputes about assets can be costly.
- Medical expenses. Healthcare costs can drain your estate over time. That’s why proper asset protection is not just for the wealthy—it’s for anyone who wants to pass on their legacy intact.
Important Asset Protection Strategies
The goal of asset protection is to make assets harder to reach—not to hide them. Any attempt to move assets just to avoid an existing creditor may be deemed a fraudulent conveyance, which is illegal. What’s important to remember is that courts will scrutinize and evaluate transfers that you make after a lawsuit is filed or you’ve incurred debt. But if you’ve created a solid estate plan well in advance, when no one is threatening a lawsuit, your strategies are viewed as proactive and not fraudulent. Here are some lawful asset protection strategies that might work for you:
Create an Offshore Trust
If you want a high level of asset protection, an offshore trust may work for you. When you place assets into this legal structure, such as trusts or companies located outside the United States, you can limit your legal exposure, preserve financial privacy, and create distance between your wealth and U.S. court authority. You can set up offshore trusts in places like the Cook Islands, a self-governing Polynesian island nation located in the South Pacific that has the world’s strongest asset protection laws. Other locations include Belize and Nevis. These locations offer confidentiality and privacy rules and favorable trust laws.
When you set up an offshore account, it can protect investments, cash, real estate, intellectual property, and cryptocurrency. But these accounts require careful planning and compliance with U.S. tax laws.
Form an LLC
Forming a Limited Liability Company (LLC) creates a barrier between your personal assets and your business. An LLC is a legal entity that can hold assets such as businesses, rental properties, investments, and cryptocurrency. By placing these assets in the LLC, it separates your personal wealth from business liabilities. When you transfer assets into the LLC, the LLC, not you personally, holds the title or account to those assets. If the LLC is sued or incurs debt, only the company’s holdings are at risk. Creditors making a claim can typically only pursue the assets owned by the LLC, and your house, personal bank accounts, cars, and other personal property are shielded from the claim.
Create an Irrevocable Trust
Another method for protecting assets in New York is to create an irrevocable trust. This legal structure allows you to transfer ownership of specific assets to a trustee. Once you place assets into an irrevocable trust, you no longer own them—meaning creditors can’t touch them. The strength of this protection strategy is that you can’t change the terms of the trust or reclaim the assets. Once assets are placed into the trust, you cannot easily amend the terms of the trust or reclaim the assets. Because you don’t control the assets, they’re outside the reach of lawsuits, creditors, and potential long-term care expenses, if properly structured. This makes irrevocable trusts a powerful tool for those seeking financial security.
It's important to remember that you have to give up total control of the transferred assets to gain the protection of the trust. If you retain too much power over the trust, a court might rule that the assets are really part of your estate.
Draw up Pre-Nuptial and Post-Nuptial Agreements
If you’re married or plan to be, these agreements define how your assets will be divided if your marriage ends. If you have significant wealth, own a business, or have multiple properties, these documents can be very useful in preventing long, expensive court battles in the event of a divorce.
If you enter into a marriage with inherited assets, or inherit them while married, have business interests, or significant personal wealth, these documents can safeguard them all. For the agreements to be legal and enforceable, they must be accurately drafted in clear language, as the courts may reject any wording that is vague or confusing.
Landskind & Ricaforte Law Group, P.C. for Asset Protecting Planning
When you want to protect your assets, our skilled attorneys can work with you to create the type of strategy that will best shield your wealth from creditors and lawsuits. There are multiple options to choose from, and sometimes the best approach combines multiple tools. Let our legal team help you create an estate plan that shelters your hard-earned wealth, so your legacy lives on the way you intend. Read our testimonials to learn how we’ve helped other clients create estate plans to protect their money.