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