What’s more important than winning a lawsuit? Making sure you don’t get sued in the first place. This is where asset protection planning come in.
If you’re a professional in a high-risk occupation, or a business or property owner, chances are someone will be tempted to dip into your “deep pockets.” Business owners, property owners, and professionals such as doctors, dentists, lawyers and accountants, are at risk for lawsuits for a number of reasons, including:
- Professional malpractice liability
- Personal liability of corporate officers and directors
- Lawsuits by former business partners
- Personal injury suffered on your premises
- Personal injury resulting from a motor vehicle accident
- Liability as guarantor for the debts of another
- Liability arising from misconduct
Millions of lawsuits are filed every year. Many are frivolous or settled for amounts that far exceed the actual damages. Asset protection planning can prevent you from becoming an easy target, boost your settlement negotiation power and make sure that you keep your hard-earned dollars.
So who needs asset protection planning? Anyone with assets to protect. But a word of caution, asset protection planning is not for those who are already being sued or under threat of a lawsuit.
Voidable transfer laws (often called fraudulent conveyance laws) prevent people from transferring assets for the purpose of making them unavailable to creditors. Creditors can set aside any asset transfers within the last four or five years (depending on your state). Voidable transfer laws do not require the presence of a judgement or suit, but simply a claim. A claim is a situation that could give rise to a liability such as a loan or business relationship.
Asset protection planning includes a variety of strategies depending on the needs of the client, the types of assets owned and the tax regulations associated with those assets. Possibilities include:
- Wyoming LLCs
- Domestic and offshore trusts
- Domestic and offshore business entity formation
- Exempt asset protections under state law
- Negotiation and preparation of pre and post-marital agreements
For asset protection planning to work, you must do it before your assets are threatened.
You also must do it right. Don’t risk losing your life’s savings to a do-it-yourself, one-size-fits-all plan. A knowledgeable asset protection planning attorney can draft a proper operating agreement and follow the correct formation requirements to ensure that your LLC or other asset protection strategy works when you need it.
A qualified asset protection attorney can help you protect your assets against potential litigation, judgments, liens, and fraud in a manner that is effective, legal and ethical. Insurance alone does not always adequately protect against all of these threats, but is an important part of an overall asset protection plan. If your assets are protected, claimants may have to settle for the applicable insurance limits.
There are many schemes that unscrupulous people can use to try to rob you of your hard-earned assets. Unfortunately, innocence alone cannot protect you. Even if you win the lawsuit, you still have the exposure to legal fees, asset freezes that could impact current business operations, and a reputation damage that could hinder future profitability.
You can prepare and protect yourself, your family, and your business from this possibility. With the proper planning, an asset protection attorney can help you deter potential creditors from suing you and minimize their ability to seize your assets and collect judgments.