Assets are important elements in one’s life and business operation. They determine your net worth, which presents your financial standing. An asset is anything you own that has financial value, like your cars, jewelry, insurance policies, and savings account.
The more assets you have, the greater your net worth, and a greater net worth presents a better financial standing. That’s why you must be meticulous when protecting your assets.
For people who live in Canada, the government emphasized the importance of managing them, especially for older people, to protect their plans, such as pensions and investments.
The best way to do this is to be financially knowledgeable and aware of what you have. To get you started, here are different ways to protect your assets.
Have a Decent Financial Plan
Before you start anything, the best way to manage and protect your assets is by creating a well-thought financial plan. You can initially determine your goals and list what you want to achieve, personally and financially.
Consider your dreams, your future self, and your retirement. Then, try to assess how you would want to achieve these goals. Would you need more assets? Do you need to improve some of what you already have?
Like any other plan, you must list your goals as SMART (specific, measurable, achievable, realistic, and timely). However, if you’re still unsure of how to prepare a proper financial plan, it would help you to seek professional advice from experts in the financial field.
Maintain Your Assets
Once you have figured out your financial plan, ensure you maintain your assets. Depending on your asset type, you might need to make regular payments to protect its value, like taxes. Aside from that, the most effective way would be to have a complete list of your assets that can help you easily track them.
Some people attempt to improve their investments by applying for loans from banks or lenders to secure funding options. The officers will then Underwrite your account to determine your eligibility and check the risk factor if they offer you a loan. However, you should remember that this process will be assessed entirely by the financial institution. So, it still entails uncertainty, but it’s a good alternative to managing your assets.
Moreover, you can quickly check profitability and your financial position by maintaining your asset. Knowing that your assets are accounted for will give you peace of mind. While you’re at it, carefully understand how taxes work in Canada to understand better how to protect what you have.
Prepare Backup Plans
To further prepare yourself for unforeseen issues, it would be beneficial to prepare backup plans just in case. If there are chances that you’ll be unable to handle your finances personally, having someone have the power to handle your affairs for you can help you.
In cases like this, having a power of attorney will allow the person to be your decision-maker when you become incapable or competent.
Aside from that, if you plan to protect your assets in case anything happens, preparing a legal document that discloses what you want to do with them will help you and your loved ones. Marriage and death are the best scenarios to explain better what you can do to protect your assets.
- Marriage. Marriage combines the couple’s assets and liabilities into a single account. In Canada, court divorces are legal. If you want to protect your assets, having pre-nuptial agreements, or a marriage contract, let you and your partner look into the future that allows you to discuss who will get to keep certain assets even if you break off your union. No one will be left with nothing when the marriage ends.
- Wills. Will is a legal document containing your authority to choose who will keep what when you die. Furthermore, it will help reduce the inheritance tax liability when you die. People you appoint with power of attorney are usually the ones who carry the responsibility of delivering your will or ensuring that it’s entirely processed after you rest.
Avoid Contracts That You Don’t Understand
The most common mistake you should prevent is signing any contracts you don’t completely understand.
Signing just any legal documents related to your financial situation without reading through the content can put you at risk of fraud and theft. If you don’t want to ignore the papers completely, consult them with your financial advisor to determine if the document is fit.
Aside from that, if you’re not expecting any emails or calls from random people that want to discuss your finances, it would help you not to entertain them, especially if they offer too-good-to-be-true promos.
Assess if the emails and calls are from legitimate institutions. Remember that banks or other financial offices will not ask about your confidential personal and financial information through calls.
Managing and protecting your assets will help you live a life free from financial issues. Aside from that, protecting them will allow you to bestow your riches to your loved ones in case unfortunate events happen to you. With the help of the tips mentioned above, you can start planning how you would want to protect your assets to mold a path toward your dream future.