Consider this scenario: A small business owner in Suffolk County is sued after a customer suffers an injury on their property. Despite having liability insurance, the plaintiff’s losses far exceed the policy limits. Now the business and the owner’s personal assets, including their home, are at risk due to an unintended liability.
Unfortunately, situations like this are not uncommon, and they serve as a reminder of how even prudent people can find themselves vulnerable through no fault of their own. That’s why it’s important to learn how to protect family assets in Long Island, New York.
Protecting the assets you’ve worked hard to accumulate is an important part of financial planning. Whether it’s your family home, retirement savings, or a small business, taking steps to shield what’s important to you is crucial for long-term financial stability. However, asset protection can seem complex if you’re unfamiliar with the basic strategies.
In this brief, yet informative article, we’ll break down how to protect family assets in Long Island, New York. By the end, you will have gained a solid understanding of the fundamental concepts surrounding this often overlooked aspect of financial planning.
What Is Asset Protection?
Asset protection refers to the process of structuring your personal and financial affairs to help shield your valuable assets from potential risks and unforeseen liabilities. This may involve legal ownership arrangements, proper insurance coverage, or other precautions as circumstances dictate.
At its foundation, asset protection seeks to ensure that what is most important to you—such as your family’s home, business, savings, and other property—will still be there if serious trouble arises like lawsuits, taxes, bankruptcy, etc. It allows for greater security and peace of mind when managing your wealth over the long run.
While wealth preservation is a key goal, asset protection is not about hiding assets, as common misconceptions dictate. Rather, it is using legitimate strategies tailored to your situation to minimize risks in an open and compliant manner. With so many uncertainties in life, taking basic precautions makes good financial sense—and there are simple steps everyone can take, starting with contacting an experienced asset protection attorney.
Common Risks That Could Threaten Your Home and Savings in Long Island
While asset protection plans seek to account for unexpected incidents, remaining aware of risks that are more prevalent in our area is crucial. Here are some issues Long Island residents commonly face:
- Lawsuits – As the density of activity increases, so does the potential for legal action over accidents, property damage, injuries, contractual disputes and more. New York is also considered a “high risk” state for litigation. Proper insurance and liability protection are non-negotiable.
- Creditor Claims – Debt has caused many Long Island families to lose homes and assets. Establishing protections for your property through ownership entities and trusts can help safeguard against creditor claims in the event of debt issues arising.
- Taxes – Our high cost of living means greater assets, but also higher property, income and estate taxes that require proper planning. Certain strategies, such as registering an LLC, can help manage obligations over time.
- Identity Theft – In densely populated areas, protecting personal information requires diligence. Hackers and scammers pose risks, as do unhappy former employees or partners. Monitoring your credit regularly is crucial.
- Natural Disasters – Being near the water leaves homes and businesses vulnerable to flooding and hurricanes. Having proper insurance in place, including coverage for living expenses if displaced, offers reassurance.
Knowing common risks unique to our area empowers you to take basic steps through ownership plans and insurance to help safeguard your hard-earned wealth and secure your family’s future.
Common Asset Protection Strategies
Now that we’ve explored what asset protection aims to accomplish and some key risks in our area, let’s look at common strategies used by asset protection lawyers to help shield assets from those potential threats. Two of the most prevalent approaches are trusts and limited liability entities.
Trusts — Used properly, a trust allows you to designate trustees to manage assets on behalf of beneficiaries you select. Revocable “living trusts” are commonly used to privately own property like real estate while bypassing probate. Irrevocable trusts, on the other hand, help protect assets from lawsuits and divorce by transferring legal ownership.
Limited Liability Entities — Forming an LLC or corporation creates a legal “shield” which separates your personal assets from your business. This is useful for real estate investors and business owners, helping to ensure your primary residence and investments are not put at risk if your company faces a dispute. Such entities also provide tax planning opportunities.
Proper Insurance — While not strictly a legal structure, comprehensive insurance coverage is another important precaution to deploy. This includes liability policies for your business, homeowner’s or renter’s insurance, umbrella insurance for significant assets, and life or disability coverage for unforeseen circumstances.
These time-tested strategies can help safeguard what you’ve built if properly implemented. In the following sections, we will explore trusts and limited liability entities in further detail.
Which Trust Is Right for You?
When setting up a trust, one of the first decisions is whether to create a revocable or irrevocable version. Each type has pros and cons to consider:
- You retain full control over assets and can modify the trust at any time.
- Passes assets outside of probate when you pass away.
- Provides little to no creditor protection benefits during your lifetime.
- Assets are permanently transferred out of your estate.
- Gives assets immediate protection from lawsuits and creditors.
- You relinquish control—trustees control assets according to the trust terms.
- May involve higher upfront costs than a revocable trust.
For most homeowners and families building wealth, a revocable living trust is the best starting point, as it provides probate avoidance with minimal complexity. Irrevocable trusts are better suited once significant assets accumulate, in order to take advantage of greater legal protections. Working with an asset protection attorney can help ensure that you choose the right structure for your current needs and future goals.
Limited Liability Entities for Asset Protection
Beyond trusts, forming ownership through business entities is another powerful method for protecting assets long-term. Here are two prominent options:
Limited Liability Company (LLC):
- LLCs offer liability protection similar to a corporation but provide pass-through tax benefits of a partnership.
- Great for real estate, small businesses, rental properties, and investment assets.
- Ownership shares may be distributed between members.
S-Corporation:
- Corporate structure shelters personal assets from business liability.
- Profits and losses pass to shareholders’ personal tax returns.
- Ownership limited to 100 shareholders.
Proper legal formation and ongoing compliance are crucial. LLCs and S-Corps ensure personal assets cannot be named in business lawsuits or bankruptcy. Combined with insurance, they create robust safeguards for owners. Consult an experienced attorney to determine the best structure(s) tailored to your situation.
Sheryll Law, P.C.: Estate Planning and Asset Protection Attorney on the East End of Long Island
Have you been typing “asset protection attorney near me” into your search bar?
Our experienced asset protection lawyers at Sheryll Law, P.C. can help ensure your ownership structures and plans are optimally tailored to suit your unique situation. Whether you require a new trust, advice on ownership entities, guidance selecting insurance policies, or assistance updating an existing plan, our team is ready to help. We take the time to understand your full circumstances, goals for the future, and risk tolerance in order to develop individualized solutions you can feel confident about.
Let us be your legal guide in comprehensively safeguarding the wealth and legacy you’ve built. Contact us at (631) 506-8440 or complete our online form to schedule a consultation.
Copyright © 2024. Sheryll Law, P.C. All rights reserved.
The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.
Sheryll Law, P.C.
633 East Main Street, Suite 2
Riverhead, New York 11901
(631) 506-8440
https://sheryll-law.com/
