Asset protection strategies are gaining popularity but there are some points to keep in mind before you take any actions. You should know your state’s law, for example. Different assets are protected from creditors by different states.
Perhaps most important, you should act before your assets are actively threatened. If you wait until there’s real jeopardy, any transfers may be considered fraudulent and disregarded.
In addition, you must decide whom to trust. Joint ownership may work if you’re in a strong marriage while other tactics may be preferable if you’re not.
Don’t forget the tax angles. Transferring assets may trigger a gift tax. On the other hand, such transfers remove the assets from your taxable estate as well as any appreciation enjoyed by those assets after the transfer.
Ultimately, you should be prepared to justify your actions. In case the matter ever comes to court, you won’t want to say you did something to protect assets from creditors. You should have another justification–such as reducing estate tax or providing security for your loved ones.