Signing a personal guaranty for your business or a relative can have a variety of financial implications. It can also limit your asset protection alternatives.

Asset protection planning frequently involves the transfer of assets. An asset transfer will be a “fraudulent conveyance” if it renders you insolvent (that is, if it means you may not able to meet your financial obligations).

Many of us have personally guaranteed loans for a business, a child, or other family member (perhaps a lease obligation or student loan). It can be easy to forget about these potential obligations.

I am certainly not suggesting you should avoid all guarantees. It is important to keep in mind, however, that personal guarantees must be taken into account in deciding whether you can transfer assets to an asset protection trust, limited liability company, or any other person or entity.