Legally Mine: Are Your Bank and Brokerage Accounts Safe From Lawsuits?

How and where you keep your savings and retirement money can have a huge impact on how secure it is. This statement isn’t necessarily a commentary on how you decide to build your wealth, but on how and where you store it. Ask yourself, “in the event of a lawsuit, would my wealth be legally mine?”

Bank and brokerage accounts, for example, are some of the safest financial assets you can have. By themselves, these accounts aren’t necessarily at particular risk of being sued out from under you. However, when you are named in a lawsuit and these assets are found during an investigation, the fact that you even have them could give an opposing attorney reason to recommend pursuing the suit to gain access to your other types of wealth. Perhaps this seems unfair, but no matter how unfortunate it is, it’s completely legal.

So, How Do I Ensure My Assets Are Legally Mine?

When an attorney performs an asset search, they will be looking for wealth that exists under your name. Therefore, if you change the owner’s name of record of your brokerage or bank accounts, you can shield them from being associated with you.

Name modification is an effective asset protection tool when used along with limited partnerships and other asset protection strategies. If you maintain signature authority over these bank and brokerage accounts, they may still be exposed during an asset search. The important thing to remember, however, is that under a limited partnership or other asset protection entity, a creditor’s ability to access those accounts will be severely limited or completely void. This is where your “legally mine” protection lies.

Why Can’t I Transfer Assets to Heirs?

It’s common for people to transfer their bank and brokerage accounts into the name of a child or spouse. But the good intentions of this practice can have unexpected drawbacks. You might add someone else’s name to the account so that they can take care of bills and other transactions in case you are ever rendered unable to do so. But keep in mind that when someone else becomes co-owner of those assets, they not only have the right to withdraw the money, but that wealth could also become accessible to their creditors.

Also remember that in the event of your death, joint tenancy ownership will always supersede a will or trust. “That means the co-owner of your bank and brokerage accounts will become the owner, no matter what your trust or will has to say about it,” says Matthew McNeff, asset protection specialist at Legally Mine.

Consider a Separate-Limited Partnership

The best way to ensure you’re using the right asset protection strategies is to consult a specialist. He or she can help families with significant liquid safe assets choose the right asset protection strategy. This will often include a Limited Partnership, which can be used to hold savings and brokerage accounts, along with stocks and bonds, antiques, collectibles, jewelry, artwork, family heirlooms — essentially anything of real value to the family outside of firearms or vehicles.

Since these are liquid assets, they are not necessarily tied to the family’s state of residence. That leads many asset protection professionals at Legally Mine and other firms to establish these partnerships in states with a history of very strong Limited-Partnership provisions, such as Utah, Nevada, or Alaska (Legally Mine is actually located in Utah).

When setting up a Limited Partnership or other asset protection strategies, the most important thing is to use an experienced professional. Start by doing some homework to find a qualified asset protection attorney in your area. Then, have an open conversation about what assets you have in place so that he or she can help you protect what you’ve worked so hard to accomplish.