The Benefits of Asset Protection in South Carolina. You’ve worked hard to build your wealth, so it’s only natural to want to protect it. Unfortunately, life is full of surprises, and unexpected events like lawsuits, divorce, or creditor claims can quickly erode your financial security. That’s where asset protection comes in! By implementing legal strategies to safeguard your assets, you can help ensure that your hard-earned wealth stays in your hands, even in the face of unexpected challenges.
South Carolina is known for its business-friendly environment, but that doesn’t mean individuals are immune to legal claims. Whether you’re a business owner, a real estate investor, or simply someone with assets to protect, there are numerous asset protection strategies you can use to safeguard your wealth in South Carolina.
Umbrella Coverage
Umbrella coverage is excess personal liability coverage—it protects you from major claims and lawsuits, thus helping to protect your assets.
There are two aspects to umbrella coverage. First, it can provide additional liability coverage above the limits of your property and casualty insurance policies (e.g., boat or automobile insurance). This coverage is designed to kick in when the liability coverage on those other policies has been exhausted. Second, it provides coverage for claims that might be excluded by other liability policies, such as false arrest, defamation (libel and slander), liability on rental units you might own, etc. As well as covering losses from these risks, umbrella coverage also helps cover attorneys’ fees and, in some cases, other charges associated with lawsuits.
In addition to umbrella coverage, you can also consider specialized insurance, such as kidnap and ransom insurance or identity fraud protection, as well as directors and officers liability insurance (if you serve on any boards of directors) and employment practices liability insurance (which, if you are an employer, protects you against employment-related claims, including discrimination and wrongful termination).
Remove Yourself From the Public Record: Own Nothing
You’ve heard the saying “own nothing but control everything”. By using a trust and a registered agent service for your assets you do not appear in the public record as owning any assets. This process greatly decreases the likelihood of an attorney conducting a public records search and finding that you have assets that can be pursued in a lawsuit. South Carolina Attorneys at Law can function as your Registered Agent. Contact us to learn more about this service offering.
Equity Stripping: Make Yourself Look Poor
The process of reducing the equity value of a real estate asset. Essentially, it entails encumbering a property with debt to such an extent that there is little or no equity for creditors to acquire or see in a public records search. Equity stripping strategies can be used by debtors as means of making properties unattractive to creditors, as well as by predatory lenders looking to take advantage of homeowners facing foreclosure.
Retirement Accounts and IRAs
Employer-sponsored qualified retirement plans governed by ERISA (the Employee Retirement Income Security Act of 1974) are federally protected from the claims of creditors. IRAs, on the other hand, are governed by state law, and the extent of their protection varies by state; once an IRA owner dies, a non-spousal inherited IRA often will have less protection than the IRA did during the owner’s lifetime. In any case, acquiring assets in retirement accounts—including ones you set up yourself for your own business—is another way to protect assets relatively simply.
The Homestead Exemption: Shield Your Home Equity
One of the most common ways to protect your home equity is through the homestead exemption. In South Carolina, you can protect up to $50,000 of your home equity from creditors. This means that if you owe money to a creditor, they cannot force the sale of your home to satisfy the debt, as long as the equity in your home is $50,000 or less.
Irrevocable Gifts and Irrevocable Trusts: Secure Your Assets for the Future
Another popular asset protection strategy is to establish an irrevocable trust. By transferring your assets into a trust, you can effectively remove them from your ownership and protect them from legal claims. However, it’s important to note that once assets are transferred into an irrevocable trust, you cannot change your mind and take them back.
Limited Liability Companies (LLCs): Safeguard Business and Personal Assets
If you own a business, forming a limited liability company (LLC) can help protect your personal assets from the business’s debts and legal claims. An LLC is a separate legal entity from its owners, which means that the business’s debts and legal claims cannot be pursued against the individual owners. Instead, the liability is limited to the assets of the LLC.
Combining Techniques: Legal Entity + Trust
Sometimes less is more, but for asset protection, sometimes more is more. If you create an entity, transfer assets to the entity, and then contribute the entity to an asset protection trust, you can give yourself two layers of protection—even if a creditor can somehow “break through” the asset protection trust, your assets are still protected in an entity. It will require that much more effort on the part of your creditors to reach the assets inside the entity—and the reasons a court of competent jurisdiction might disregard an asset protection trust are different from the reasons a court might disregard an entity.
As always, you should consider the tradeoff between complexity on the one hand, and effectiveness on the other. Often, you can achieve significant asset protection with relatively simple techniques. But, you may be willing to assume the added complexity of the more sophisticated techniques for the additional creditor protection benefits these techniques offer.
Protect Your Assets with Proven Asset Protection Strategies
In South Carolina, asset protection is an essential tool for safeguarding your financial future. By implementing legal strategies like the homestead exemption, irrevocable trusts, LLCs, and many others you can protect your assets from unexpected legal claims. However, it’s important to work with a qualified attorney to determine the most appropriate asset protection strategy for your unique situation.
At South Carolina Attorneys at Law, we understand the importance of Asset Protection in South Carolina. Our experienced attorneys can help you navigate the complex world of asset protection and develop a customized asset protection blueprint and strategy to safeguard your wealth. Contact our estate planning practice group today to get your own asset protection blueprint and schedule a consultation HERE to learn more about how we can help you protect your assets in South Carolina.
