Asset Protection for Your Home
It is often shocking to find out how vulnerable your home, your most valuable asset is to being lost when a few simple, inexpensive asset protection steps can protect it.
Please visit your Police Benefits Plan for more detail. Or you can contact me directly for more information.
Tenants by the Entirety for Asset Protection
High-risk, uninsured professions require you to hold title to your marital residence in Tenants by the Entirety.
The Tenants by the Entirety form of legal title protects your marital property from lawsuits and creditors of one spouse. This legal title is exclusively available to married couples. Consequently, claims made against both spouses are not covered, and it is only effective for your principal place of residence. For more information on your current title and TBE deeds, you may contact me.
Homeowners Insurance Protection
Make sure your homeowner’s insurance policy adequately protects you from unexpected events.
Avoid Being Underinsured:
- You need enough replacement cost and extended replacement cost insurance limits to rebuild your house entirely if it is destroyed. Extended replacement cost coverage adds up to 20% over replacement cost limits if a disaster increases building material and labor costs. For example, we are seeing that now with the enormous increase in the price of lumber because of 2020 events.
- Inflation guard coverage adjusts rebuilding costs that have increased since you purchased your home.
- Ordinance or law coverage pays for the cost of rebuilding to meet new and often stricter building codes or changes in the law.
- Water backup coverage is essential if you live in Chicago and have a basement or live in a flood zone.
- Flood coverage. Standard home insurance policies do not cover damage from the flooding of a hurricane or river overflow act. However, you can obtain this coverage from the federal government’s National Flood Insurance Program, www.floodsmart.gov, and your insurance agent or company can assist you.
- Personal Possessions coverage amount should protect the replacement of all the contents of your home if they are stolen or destroyed in a disaster. Therefore, you should do a periodic inventory of the actual value of all your possessions. Compare inventory to the total to the coverage amount on your policy. A replacement cost policy is far better than an actual cost policy. That is to say, it pays the current cost to replace a possession instead of just reimbursing you for what you spent ten years ago or more.
- Asset protection coverage. Most homeowners policies have $100,000 in liability protection against damages you, a family member, or a pet causes to another person. Consequently, it is not enough insurance coverage. Importantly, you should consider carrying Umbrella Insurance coverage – see below.
Umbrella Insurance Asset Protection
An umbrella insurance policy provides a minimum of $1 million in liability protection for your home and each auto covered under the same policy. It costs an average of only $225 per year.
If you consider the cost of hospitalization for injuries sustained in a minor vehicle accident or a fall or accident in your home, $100,000 isn’t going to cover it. In other words, you will be held liable for the excess amount. Most umbrella policies have 1, 2, and 3 million dollar limits. Certainly, it would be best if you always carry enough liability insurance to cover the full value of your assets.
At the end of your life, or if you become incapacitated, if your home title, investment, or bank accounts are in your name, they are at risk of Probate. It is essential to remember that a Will does not avoid Probate, a system that takes an average of 18 months or more to complete.
A Revocable Living Trust is a written, legal document that can avoid Probate. A Trust allows you to privately pass your assets to your family, friends, or charities after your death. These include your real estate, bank accounts, stocks, and minor beneficiary policies and accounts.
Compared to the cost and length of Probate, a Living Trust is one of the least expensive and best investments you can make for your family.
Police Benefits Plan
For an expanded presentation of asset protection strategies and to receive regular updates on strategies to protect what you have earned, visit and register with the Police Benefits Plan on the link below. Registration for police, retirees, and families is free.
Visit www.policebenefitsplan.com or call 1-312-559-8444 for assistance with registering.
Tom Tuohy is the founder of Tuohy Law Offices and the Police Benefits Plan. He has been a police lawyer for over three decades. His father was a CPD detective, and his grandfather was CPD Chief of Major Investigations. You can reach Tom at 312-559-8400 or in his Oakbrook Terrace offices.