What is asset protection?

Asset protection is a type of wealth planning that protects assets from creditor claims. Most individual asset protection strategies are targeted at protecting what is usually a person’s most valuable asset – their home – although it can be used by businesses as well.

Chester residents generally have large sums invested in their homes. The average price of a Chester house, according to property website Rightmove, is £230,604. In 2016, house prices rose by 4%, giving Chester homeowners plenty of reason to consider asset protection to safeguard their home.

Why is asset protection necessary?

There are a number of reasons why your property could be at risk. You could be faced with an expensive lawsuit because of negligence, our you could own other property which is subject to foreclosure because of mortgage arrears. Divorce proceedings are although a common cause of uncertainty over a home’s future.

Asset protection is a legal way to prevent your home being seized in the case of lawsuits and divorce.

Plan ahead

Asset protection should be arranged before your home becomes at risk. If you have no asset protection plans when a lawsuit goes against you, there are steps you can take to protect your home, but it’s better to plan ahead just in case of a threat to your home.

Trusts

A common way to protect your assets is through a trust. After a trust has been set up, assets and money can be transferred to it, and then withdrawn at any time. You can be named the principal beneficiary of the trust and be entitled to occupy the property for the rest of your life.

After you die, the trust can remain so that it can continue to protect your assets. Trusts can be set up by both individuals and companies.

Transferring property

Property can be transferred as a gift to a family member either as joint or whole owner. This can protect your property, but there are risks.

The recipient must be trusted. There are occasions when homes are transferred to a spouse, only for divorce proceedings to complicate matters. Also, remember that high-value gifts may be subject to tax.

Insurance

Asset protection does not cover everything. Though your assets can be protected from lawsuits, you may still be liable to pay legal costs associated with any court actions. Insurance can be bought to cover legal fees.

Mortgage protection, life insurance and sickness insurance are other useful insurance policies to protect your wealth.

Offshore

For businesses and wealthy individuals, offshore bank accounts and offshore trusts can be used to protect assets. No matter where you live, an offshore trust can be formed and assets transferred to the trust, which becomes their legal owner.

There can be problems transferring your main residence to an offshore trust, and it is not always straightforward to transfer assets back to your ownership, so care should be taken and advice sought.

Get advice

Asset protection for Chester residents can be complex, so why not book a free initial discussion with an asset protection expert at Endeavour Financial Planning to see how we can help you protect your valuable assets?

Estate Planning and Trusts advice are not regulated by the Financial Conduct Authority.