One mistake can put a huge dent in your assets or even devastate you financially. You need to stay on top of asset protection issues so that you don't lose the assets that you have worked so hard for in your life.

The following are five mistakes you need to avoid to protect your assets from financial pitfalls:

Not having enough liability insurance

If you're concerned about protecting your assets, you may want to reevaluate the insurance coverage that you have. Having more liability insurance can protect you from devastating expenses resulting from events like automobile accidents or damage to your home. 

Not setting a business up as a corporation or LLC

If you own your own business, you should look into protecting your assets with the corporate veil.

If your business is hit with a liability expense and you have a sole proprietorship, you're going to have to cover the expense with your own assets. If you have set up your business as a corporation or LLC, your assets are protected from liabilities that your company faces. 

Sharing a joint account or multiple joint accounts with a spouse, family member, or business partner

It's important to realize that anyone you share an account with could potentially empty that account without your authorization.

While most married couples have joint accounts, you might want to reconsider pooling funds in a joint account to protect your assets. If you go through a divorce or if your spouse needs money for an expense that you don't agree with, your finances could be negatively impacted.

Avoid sharing an account with a spouse, family member, or business partner unless you are very comfortable with the arrangement and have enough trust in the person that you know you're assets are safe.

Operating with business agreements that have not been formalized

The only way to feel confident that you have any stability in your business operations is if you have a formal, contract agreement with those you work with and do business with.

Informal or "handshake" business agreements don't entail any legal obligations and can disappear at a moment's notice. Formalize your business agreements to avoid issues down the road.

Failing to properly document all of your possessions

Having your assets documented is important when it comes to filing insurance claims. If your home suffers catastrophic damages, you're probably not going to be compensated by your homeowner's insurance for items you don't have proper documentation for.

Get valuable items appraised to show your ownership of them and keep sales receipts to document your possessions. Contact a company like Tampertech for more help.