Utah Asset Protection Planning
Asset protection planning involves making prudent decisions today to protect yourself, your business, and your hard-earned assets from loss due to lawsuits, creditors or bankruptcies. This type of legal planning is especially prudent for professionals and business owners, whose personal assets could be at risk due the nature of their employment.
Statistically and anecdotally, we all know that the number of divorces, lawsuits and bankruptcies is staggering. While no one believes lightning will strike them, wealth created through a lifetime of work, saving and investing can be lost overnight if these forms of man-made lightning do strike. To protect your assets from such disaster, proper risk management strategies should be given careful consideration. These strategies include exempting your assets from the claims of creditors, limiting your liability through legal entities, and transferring your risk through insurance.
Exempting Assets in Utah
State and federal laws exempt some of your assets from the claims of creditors. Click here to download a listing of Utah’s exempt assets. Note that while some states allow you to choose either the state or federal exemptions, in Utah, you must use the state exemptions and federal bankruptcy exemptions are not available.
One important note for Utah residents is that a Homestead Declaration should be filed in order to fully protect the homestead exemption (see the code online here).
Once you have identified the protected asset classes available to you under applicable law, it may be prudent to maximize your protection by converting non-exempt assets into exempt assets.
Limiting Liability for Professionals & Business Owners
Many entrepreneurs operate their businesses as sole proprietors rather than through a legal entity, such as a Corporation or a Limited Liability Company. Whether their business is home-based or in the Fortune 500, these business owners are attracted by the informality of sole proprietorship. They also do not want to incur legal fees to create and maintain a legal entity. However, in addition to other advantages, conducting business through a legal entity may offer substantial risk management benefits.
While lawsuits brought against a sole proprietorship are really lawsuits against the owner's personal assets, lawsuits against a properly created and maintained legal entity are really lawsuits against the entity's assets. Nevertheless, the selection of an appropriate legal entity is critical for managing your risk.
Transferring Risk with Insurance
When was the last time you reviewed the details of your liability insurance program with your insurance professionals? Are your policies current? Are the coverage limits adequate and are the deductibles reasonable? Have you scrutinized the policies for loopholes? Remember: the fundamental philosophy of any insurance coverage is to pay a premium you can afford to transfer a risk you cannot afford. Take time to understand both the risks you have retained and the risks you have transferred.Salt Lake City Estate Planning Attorney Jason Hunter assists clients with Estate Planning, Wills, Trusts, Revocable Living Trusts, Charitable Planning, Utah Probate and Estate Administration, Asset Protection, Business Succession Planning, Elder Law and Long-Term Care Planning, Special Needs, and Tax and Corporate Planning in the greater Salt Lake City and Ogden, Utah areas as well as St. George, Cedar City, Kanab, Park City, Provo, Orem, and Logan, in addition to clients living near his offices in Salt Lake, Davis, Utah, and Weber Counties.
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