Some people do not like the idea of asset protection; they believe that debts should always be paid or court orders to pay creditors should always be collected. Litigation within the justice system is always uncertain. Final judgments are unpredictable because of innovative legal theories, varied suit amounts, and even the judges’ desires. What can you do to protect your wealth from debts, lawsuits, and others that want to get your assets?
What Asset Protection Planning Is, and What It Is Not
In order to protect your assets, you have to do it pro-actively and when no one else is trying to claim a part of your wealth via debt, lawsuits, or another strategy.
Asset protection planning has several purposes:
- Incentivize your creditor to settle a claim for less than the claim amount;
- Strengthen your leverage in negotiations;
- Increase your options if someone files a claim;
- Discourage a creditor from suing you.
Planning to protect your assets is not about paying less taxes, not being transparent, fraudulent transfers, or hiding assets. Additionally, if you wait for a claim to arise before doing this planning, it is too late.
When Done Right, Asset Protection Planning is Completely Legal and Ethical
Using available legal strategies to protect your property from claims within attorneys’ ethic rules of conduct is proper. In fact, for an attorney to not have this discussion with you may be going against their ethical duties. A line separating ethical from non-ethical attorney practices is assisting in fraudulent or criminal conduct or attempting to protect property after someone has already threated to file, or has filed, a lawsuit. This is not proper conduct, and does not protect your or your assets.
The Final Truth About Asset Protection Planning
No matter how responsible you are, it is impossible to avoid all activities that could make you liable to someone else. We are not perfect. Proactively creating a plan that protects your assets now can help you if you are ever sued. Additionally, this kind of planning can form part of a comprehensive estate or wealth plan.