Like any effective asset protection plan, you must plan early if you want to protect your assets from a personal guarantee.
We sometimes talk to people who have signed a personal guarantee for a loan and when it looks like they will default on the loan, they only then investigate how they can protect their assets.
They can’t at that point.
When you sign a personal guarantee you typically agree to not transfer any assets out of your name.
Asset protection planning involves transferring assets out of your name and into another entity or entities. If you’ve agreed to not do that, it will be pretty easy for that existing creditor to unravel any planning you have done.
The only way to protect your assets from a personal guarantee is to not have those assets in your name when you sign the guarantee.
Colin Ley is an asset protection attorney and the creator of the PREP Trust® and Better LLC™. He is also the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)
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