It’s an unfortunate fact of doing life and business, that we could one day find ourselves facing a lawsuit or financial disaster, such as:
- An expensive uninsured or underinsured motor vehicle accident
- Unanticipated medical bills
- Lawsuit from an employee or business partner
- Professional malpractice allegations
- Lawsuit resulting from damage or injury occurring at your home or business
So What is Asset Protection Planning?
Asset protection planning is the setting up your property and assets in such a way that it won’t be subject to fickle potential plaintiffs in a lawsuit. Many people don’t think about, but corporations, limited partnerships, limited liability companies all fall under the umbrella of asset protection planning.
A good asset protection plan allows a person to maintain control over assets that might otherwise be subjected to court control as the result of a lawsuit. Even in frivolous lawsuits, bullying and demands from a plaintiff and their attorneys can cost thousands, even hundreds of thousands in legal fees, lost business and community goodwill.
Asset Protection is NOT about reducing or eliminating legitimate debts.
If you legitimately owe someone a debt, asset protection planning will not relieve you of the obligation to pay the debt. Further, if you voluntarily incur a debt or obligation and then engage in asset protection planning to attempt to shelter or hide your assets from the debt, a court is likely to overturn your asset protection planning as fraudulent.
So what is the objective of asset protection planning?
Just because someone is law-abiding and careful, doesn’t mean that they will not be sued. Unfortunately, we live in a litigious society and people are always looking for someone to blame for their misfortune. Often, juries will blame professionals and business owners because they have wealth, the ability to produce more income and insurance. And while insurance should always be your first line of defense (including personal liability insurance, casualty insurance, and business or malpractice insurance if you are a professional or business owner), often having additional planning and protections in place is prudent to add additional protection against frivolous lawsuits and gold-digging plaintiffs.