| For most of us, asset protection consists of the | | | | There are several reasons for this. First of all, |
| insurance policies we buy to protect our home | | | | personal injury lawyers, in spite of their reputation |
| and its contents and our autos. These policies | | | | as sharks, really don't want to throw defendants |
| have the added benefit of providing you a | | | | out of their houses, even if they could. They |
| defense as well as source of funds to pay | | | | rather go for the low hanging fruit - in this case |
| damages if you cause an accident. | | | | the proceeds of your liability insurance policy. |
| The law also provides various means of asset | | | | They know that unless you were drunk or |
| protection, ranging from "homestead exceptions", | | | | grossly negligent, any liability award can be |
| protection of ERISA retirement funds from | | | | discharged in bankruptcy. They also know that |
| creditors, joint property ownership, bankruptcy | | | | many states have "homestead laws" that prevent |
| and more. | | | | the seizure of your home and that the money in |
| There are other types of asset protection that | | | | your retirement plans are protected by varying |
| are used by wealthy individuals to shield their | | | | degrees, depending on the state you live in. |
| assets from creditors or the tax man. | | | | In most cases, they will settle for the insurance |
| They are popular with professionals, who can lose | | | | policy limits, even if they are lower than what the |
| everything through a simple error of judgment. | | | | case might be worth. |
| Business and property owners may use them as | | | | However, especially in cases with severe injuries, |
| a tax shelter and/or estate planning measure, as | | | | the lawyer might have no choice but to pursue |
| well as a way to avoid creditors. | | | | your personal assets if your insurance coverage is |
| The problem with most asset protection schemes | | | | not adequate and you do have other assets to |
| is that they are expensive to implement and | | | | attach - don't forget your wages are an asset |
| maintain, almost always forcing you to give up all | | | | and can be garnished. |
| or part of your ownership in the asset you are | | | | For this reason, anyone with a good income and |
| trying to protect and, in many cases, are illegal to | | | | the usual collection of assets, for example a |
| boot. | | | | home, car, IRA's, other savings and investments, |
| Trusts, different corporate and partnership | | | | some original art, silverware, jewelry, etc should |
| entities and off-shore accounts are popular in this | | | | carry at least $1 million in liability coverage, maybe |
| field. | | | | more if you live in high verdict states like |
| If you are one of those who feel they need this | | | | California and New York. Your insurance agent |
| kind of protection, consult a very well qualified | | | | should be able to advise you on a prudent liability |
| lawyer - a CPA by himself won't do. And apply | | | | limit. |
| common sense. A lot of so-called professionals in | | | | This can be done by buying single limit liability |
| this field have wound up getting their clients | | | | coverage of $100,000 on your auto insurance and |
| indicted or into serious tax problems because of | | | | homeowner's insurance policies. You then buy an |
| miscalculations they have made. | | | | umbrella policy with a $100,000 deductible. If you |
| There is also an abundance of fraud, especially | | | | do this all through one agent, he can tie |
| with off-shore accounts. The money you deposit | | | | everything together so that your coverage to a |
| into an off-shore trust might simply disappear. | | | | million or more is seamless. |
| Don't forget the IRS has been subpoenaing the | | | | Property Transfers |
| names of people who just bought books about | | | | If you have already had an accident or have been |
| off-shore investing from the so-called gurus of | | | | sued for some reason, it is too late to try to |
| this field and are now delving into their finances. | | | | transfer property to another. It will likely be ruled |
| Finally don't trust that the lawyer-client relationship | | | | fraudulent, as will transfers made shortly before a |
| will protect you, especially if you're moving money | | | | bankruptcy filing. |
| off-shore. I've witnessed several instances of | | | | If you suspect you might be sued (or might have |
| lawyers turning their clients in when the IRS or | | | | to go bankrupt), especially for something you |
| District Attorney pays them a visit. | | | | have no insurance for, for example, a business |
| Asset Protection for the Rest of Us | | | | deal gone bad, consult a lawyer. You might still |
| Most of us just have to worry about the simple | | | | have time to transfer assets to either a relative, |
| mistakes we can make that cause personal | | | | a trust or to another corporation. |
| injuries to another. A car accident or a slip and fall | | | | Do not do this on your own. If done incorrectly, |
| on your property can result in a lawsuit and a | | | | you might face tax consequences and/or criminal |
| huge claim for damages. | | | | charges and still face the loss of your property. |
| This is where our homeowner's or auto insurance | | | | And remember if you transfer your property to |
| companies step in. They will provide lawyers to | | | | a relative, it can then be attacked by that |
| defend the claim, hire experts if necessary and | | | | relative's creditors. |
| pay damages up to your policy limits. | | | | This article does not purport to offer legal advice. |
| In spite of the rash of lawsuits plaguing the US, | | | | Always seek the advice of a well qualified |
| most people with adequate insurance have little to | | | | attorney before taking any steps to shield your |
| worry about. | | | | assets. |