What You Need To Know About Asset Protection & COVID-19

May 1, 2020

COVID-19 has caused many people to rethink their finances and adjust their plans for the future. If you are concerned about your assets in the wake of the coronavirus, speak with your Los Angeles accounting experts and use these tips to make a new plan. 

Reassess Asset Worth

Determine the current worth of each asset, such as land, buildings, equipment and machinery, and even furniture. If it is in your best interest to sell some of your assets to cover your mortgage and other bills, choose those that are the least likely to become more valuable over time. A piece of farming or industrial equipment, for example, is unlikely to increase in value due to the production of new models with advanced features. Acres of land, in comparison, offer development opportunities that boost finances in the future. Additionally, you may be able to sell fixed assets at a later date and use them to purchase more fixed assets, such as additional acres or buildings. 

Avoid Showing Off

Keep your assets off of social media since it advertises your monetary worth. Put this tip into practice regardless of what’s going on in the world since it can be used against you in divorce or bankruptcy proceedings. Be discrete instead, especially as financial desperation increases. Sadly, people without income because of COVID-19 layoffs and related financial losses may target those they believe have disposable income and numerous fixed assets. 

Do What You Can To Prevent Bankruptcy

Work with your Encino tax consultants and accountants to sidestep bankruptcy filings. While filing for Chapter 7 bankruptcy allows you to retain major assets such as your home and vehicle, it liquifies many other assets, puts a “black mark” on your financial record, and requires financial management classes. Determine how much your creditors are willing to work with you before taking this drastic step. 

Use Irrevocable Trusts

Protect your assets from creditors by transferring them to family members via irrevocable trusts. The IRS allows you to gift up to $15,000 per person to family members without needing to file gift tax returns. An irrevocable trust makes it possible for loved ones to use the money as income while the beneficiary is alive, unlike wills and other types of trusts. 

Discuss other asset protection strategies with the Los Angeles accountants at Wallace & Associates today.