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Many may believe that only the rich should consider protecting their assets. However, if you come to think of it, not many of us can afford to lose our homes or other hard-earned possessions in case of any accidents or unforeseen circumstances—especially those of us who don’t have a strong financial background.
If not handled properly, anyone can easily lose valuable family assets accumulated through hard work due to bankruptcy or other unprecedented incidents. Family members need protection if their loved one dies or cannot work due to an illness. Asset protection is helpful for anyone at any financial stage.
People often concentrate on gathering wealth and do not consider preserving it for unforeseeable events. It ultimately impacts your dependants in the family, such as your spouse, children or the elderly. Asset protection not only helps keep valuable possession in the hands of your family members but also prevents them from falling into the wrong hands.
Estate planning is the first step in preserving your family’s legacy. It may be a daunting task, but discussing with your family members can help clear everyone’s concerns and intentions.
Estate planning includes setting up a trust fund and writing a will, among several other legal ways. Here are five simple steps that can help preserve your family assets.
1. Draft a Will
When it comes to protecting your family’s future, there are many options to choose from. While talking about will vs living trust, each has different benefits depending upon your situation and assets.
Regardless of the size of your estate, drafting a will helps decide who will handle your financial affairs or be the guardian of your children after you die. The probate court will step in to determine the future of your estate in the absence of a will. It is a court-supervised proceeding that ensures debts of the estate are paid and the decedent’s assets are retitled in the name of their heirs.
Creating a will prevents family conflicts, eliminates confusion and most importantly, ensures that your legacy is preserved in the hands of the people you trust.
2. Setting up a Family Trust
The family trust provides benefits for close family members. A trust becomes immediately effective upon signing and funding. Although costly and complicated, the family trust offers benefits, from control over the division of assets to managing the risk of unwanted claims.
Setting up a family trust involves transferring the legal ownership of our assets to a trustee while continuing to use them as long as the deed permits. You can set up a trust through a legal trust deed document that states the trustees, beneficiaries, and various rules for the administration and management of the trust.
One of the benefits of setting up a trust is that it can help avoid the probate court from participating in the distribution of assets. A trust gives you the ability to customize your estate plan, from ensuring that the money is delivered to your grandchildren (for example) to how the beneficiaries can use the assets.
Life insurance is a way to protect your family members against unexpected financial loss. Having the right insurance in place can help tackle financial stress in the case of unforeseen tragedies.
You can buy insurance by paying an amount of money called a premium to an insurance company. If an unexpected event occurs, the damaged or lost item can be recovered by the insurance policy’s wording or through payment by the insurance company.
Buying insurance depends on your circumstances. An insurance company or broker can explain how policies work and find the one suitable to your circumstances. Although no amount of money can replace your well-being, financial security can help you and your family members in tough times.
4. Power of Attorney
This legal document empowers individuals to act on behalf of family members who cannot make decisions due to health or work-related reasons.
Power of attorney enables the person in charge to carry out banking transactions, healthcare billing, retirement benefits, and real estate decisions. Several people can be appointed as attorneys to deal with various issues.
For personal welfare, the attorney can be a family member. Choosing someone you trust ensures that you have a plan in place to manage your financial and personal affairs in your absence.
5. Investing in Real Estate
One way to increase your wealth is to invest in real estate. For stable cash flow, acquiring commercial or residential properties in high-demand areas can help you build a secure future for your family.
The key benefit of real estate investment is generating a constant cash flow after mortgage payment. Paying a property mortgage can help with building equity that gives leverage to buy more properties leading to increased cash flow.
Real estate is simple to understand and can ensure the future generation gets access to all your properties.
Final Thoughts to Preserve Your Family Assets
Your assets can be compromised or get into the wrong hands for several reasons out of your control. Preserving family assets should be your top priority when securing the future of your loved ones. Seeking help from a financial advisor or an estate planning attorney can help you distribute valuable assets among family members.
With the use of these asset protection strategies, you can give yourself some peace of mind knowing that your hard-earned assets are in safe hands.