Understanding Asset Protection in Colorado
Even if you have heard about asset protection in Colorado, chances are you don’t know much about it. In Colorado, asset protection is a term that describes the legal strategies involved in protecting your property from those who would seek to, legally, take it. Typically, this means protecting your assets against judgment creditors to win a lawsuit against you.
Even though many people associate asset protection with the wealthy, the reality is that people of much more moderate means can also benefit from some basic asset protection strategies. Even though not everyone will need to use these types of strategies when they create their estate plans, it can be useful to have a better understanding of what asset protection is before you begin your own planning efforts.
Asset Protection and Lawsuits
Most people who create asset protection plans do so to protect against the possibility of losing a lawsuit. When a person sues you and wins a judgment, that person becomes a judgment creditor. Just as you do with other creditors, you owe the judgment creditor a debt. The amount you owe is determined by the amount the creditor was awarded in the lawsuit.
After winning a lawsuit, a judgment creditor will try to collect on the judgment. Creditors can do this through various ways, such as wage garnishment and asset seizure.
However, creditors are prevented from collecting certain types of assets, known as exempt assets. One type of asset protection involves maximizing these exemptions to protect your property. With exemption asset protection, you take some of your non-exempt property and turn it into an exempt asset. The type of property exempted from creditors differs from state to state, but all states protect at least some property from judgment creditors.
Asset Protection in Colorado Springs CO and Estate Planning
Estate planning is about looking ahead, determining what will and might happen, and taking steps to protect you and your family against these possibilities and eventualities. Many of the same issues you face in estate planning are also issues you have to think about when you think about asset protection.
For example, in estate planning you often try to shield your estate from the possibility of estate taxes, while in asset protection you try to shield your assets from creditors. Because of this, creating an asset protection plan is something that naturally becomes a part of estate planning.
You should always begin estate and asset protection planning as soon as possible. You can change your plans later as your circumstances change, but starting as soon as possible is always superior to waiting.
If you haven’t considered asset protection in Colorado before and are wondering how it might be able to help you, you should talk to your estate planning attorney as soon as possible. Call our offices today at 719-520-1474 or at 303-726-6060 to set up an initial consultation with one of our estate planning attorneys.