As a resident of the state of Washington, have you considered what you should do to protect your assets? Assets can be seized in the case of divorce, auto accidents, vicarious liability, debt, medical bills, or foreclosure. Here are some of the top ways to protect what you have from creditors.
Put Your Money in an Irrevocable Trust
If your money is an in an irrevocable trust, meaning one that you don’t have control over and can’t revoke, then your money won’t be considered yours any longer and even if you have debts or are sued, no one will be able to get to the money in order to pay off those debts. By doing this, family members will be able to draw an income from the trust.
Just remember that, since Washington is a community property state, anything your spouse owns, you own, so those who benefit from the trust may need to be distanced from you, such as a sibling or child. Businesses looking to protect assets should look into business entities, which are the equivalent of trusts for businesses.
You may want insurance if your job opens you up to the possibility of a lawsuit. Professionals that are more likely to be sued include financial advisors, doctor and real estate agents. By having insurance, such as malpractice insurance for doctors, even if you are sued, the insurance will cover most if not all of the damages.
Outside of professional lawsuits, you’ll want insurance that includes homeowner’s insurance, auto insurance and commercial liability insurance. If you truly want to be careful, consider an umbrella insurance plan that covers what your other insurance policies don’t.
Have a Retirement Fund
Federal law protects assets found within retirement plans up to $1 million, and Washington protects almost everything that is found in an IRA from creditors, including traditional and Roth IRAs. This makes Washington state a great place to retire.
By moving cash that you don’t need immediately (at least not until age 59.5) to a retirement fund, you’ll be able to protect these assets. Just remember that if you decide to withdraw any of this money before you’ve reached age 59.5, there could be penalties.
Life Insurance Policies
In Washington, residents are able to have an unlimited amount of cash value in life insurance policies, which cannot be reached by creditors. As long as you’re okay with not having the money available to you in this life, which is especially good if you want your children and grandchildren to enjoy it after you’re gone, you can protect that money by using it for life insurance.
Give the Money Away
By giving the money to someone else, it is no longer your property and cannot be seized by creditors. It’s possible to give away up to $13,000 to another person without he or she being liable to pay a gift tax. You should be aware of Washington’s Fraudulent Transfer Act, however, which prohibits giving gifts in order to keep assets out of reach of creditors.
There are certain rules that determine if this is the case, including whether your intent was to avoid paying a creditor, if you pay more for something than it’s worth, or if you retained possession or control of the item.
Place Assets in an LLC
If you place assets in an LLC, you’ll have some protection from creditors accessing those assets to pay debts. This means that only the interest controlled by the LLC’s member that has debt can have it collected by creditors. Unfortunately, there’s less protection from this method within Washington state than by most LLCs formed in other states. If you want help understanding what protection can be provided, you can get the up-to-date Fisher Investment’s address and directions and get the help of one of their financial advisors, located in Camas, Washington.
If you’re worried about protecting your assets, don’t hesitate to get help. With the right guidance, you can make sure you and your family have a bright future without worry of mounting debt.