An Introduction to Asset Protection
One of the unhappy facts of financial life in our
lawsuit-happy society is the increasing danger of being
sued. And if you should have the misfortune to wind up
being sued, it could easily cost you your life savings.
Even if you win, the legal costs could still take
everything you have.
One of the best ways to protect yourself against
such a calamity is to have a professional prepare an
asset protection plan before any problems arise.
Doing so is not expensive, and provides a great
deal of assurance that you and your family will have
the benefit of the money you have built up through
years of work. Asset protection plans are a relatively
new area of law, prepared by lawyers who specialize in
protecting what you own instead of litigation.
Asset protection plans are not only for the
wealthy. An asset protection plan can be relevant if
you drive a car, have children, own a business or
simply want to pay less taxes.
It can come into action in the event of an auto
accident, if someone injures himself at your business,
or possibly in the case of a divorce.
A restaurant owner could easily be at risk, if,
despite his or her best efforts, a patron drinks too
much and is involved in a drunken driving accident. An
asset protection plan could protect the owner's
personal wealth from a lawsuit even if insurance did
not.
Similarly, a doctor is at risk of malpractice,
regardless of the level of the care provided. Awards
in those cases routinely exceed the amount of insurance
coverage. An asset protection plan could keep the
difference from coming out of the doctor's personal
assets.
Asset protection is different from traditional
retirement or estate planning. It is the protection of
your family and business from risk, by including
lawsuit protection with complete financial planning.
Most financial planning is intended to help you
establish wealth so you can retire, and pass on as much
of that wealth as possible to your family after death.
Asset protection plans include estate plans but
also help you keep your wealth while you are alive.
They often involve legal structures such as family
limited partnerships, children's trusts, exempt assets,
offshore trust arrangements and living trusts.
More lawsuits are being filed today than at any
time in history. There are 850,000 attorneys that must
be kept busy in the U.S. That is 7 times more
attorneys than IRS agents! That is 70% of the world's
lawyers. These charlatan lawyers are on your TV luring
all to come forth and sue anyone with assets worth
taking. You don't sue people, but the urge to get rich
quick is too much for some.
Lawsuits are filed in the U.S. with such reckless
abandon that a little averaging would indicate every
man, woman and child will be sued the equivalent of 5.2
time in their lifetime.
In fact, the odds of your losing a lawsuit exceed
63%, and the trend is rising.
You cannot buy enough insurance, and many types of
claims cannot be insured against at all. Ask Domino's
how well their liability insurance covered the $79
million awarded to the woman hit by a delivery truck!
Other threats to your assets include bankruptcy
filings, taxation, insurance company failures or bank
financing.
Many small businesses are finding that critical
financing is being canceled simply because their bank
has been sold or merged and no longer wants that type
of loan. The loan payments may be current, but if the
bank has been sold, or taken over by federal
regulators, they may demand immediate payment of the
loan, destroying the business.
If someone slips and falls in a business, or if a
car taps their car's rear end, they react like they
just won the lottery. If an armed thug breaks into a
home in the dead of night, slips on a child's marbles,
and breaks a leg, he can sue and likely win.
Asset protection plans are fully legal. It is not
something for people who might want to avoid the law or
their responsibilities. The law is clear as to what is
permissible and what is not. Asset protection simply
gives protection against unfair lawsuits and gives you
a level playing field to operate from.
The goal is to structure the plan so you never
have to misrepresent yourself or worry about the
legality of the plan.
Asset protection is a hot topic these days. Which
means that you need to be extremely careful -- the
waters are full of sharks.
Seminars on asset protection are being held across
the country, usually to try to sell the wealthy on the
need for immediate (and expensive) protection. Many of
the techniques are valid -- though many are not -- and
they can work just as effectively for the non-
millionaire with assets to protect.
