Let’s face it, we don’t live in the same type of society that we did 20 or 30 years ago. People are willing to sue you at the drop of a hat. Lawsuits are said to be America’s second favorite indoor activity. For example, a client of mine ran a garden hose across an infrequently used path to water her plants – has been doing so for years. Recently, a person fell off her bike while riding over the hose and is suing my client for a substantial sum.
As part of your “wealth preservation plan” it would be careless to ignore the protection side of your plan. Risk management is the process used by corporations to analyze the cost/benefit of implementing certain protective strategies. Such analysis can be applied to individuals as well.
Example: The cost to record a Declaration of Homestead in Massachusetts is $35; the benefit is protection of up to $500,000 of value of your principle residence against general creditor claims. Applying a cost benefit analysis: no brainer, record the homestead.
As your situation gets more complicated, the analysis needs more thought. What is the cost of an “umbrella” liability insurance policy? Does it make economic sense to establish a limited liability company (LLC) to own investment real estate or real estate where your business office is located? Does a self-settled asset protection trust make sense for part of your estate?
These are the type of issues that must be addressed to “preserve” your wealth for yourself and for future family members.