Asset Protection
Over the last decade, asset protection has become an increasingly important part of our family and business practice. Asset protection concepts have become an umbrella over almost everything we do.
Why is it important? There are two main reasons. First, we live in an increasingly litigious society. There are more lawsuits brought in the United States than in the rest of the world collectively. Second, even though it has abated in the last year or two, our society has a very high divorce rate. So, asset protection has become a very common issue in personal and business planning.
Asset protection is just that. Protecting one’s assets — or a beneficiary’s assets — against what some call "creditors" and "predators". We should explain.
We’re not talking about ordinary creditors – the mortgage company, the credit card company and others. We’re talking about serious, often unforeseen creditors.
Many professionals — physicians, architects and others — prefer to have their assets beyond the reach of a judgment creditor in the event of a lawsuit. There are legitimate techniques available for asset protection, particularly if they are planned well in advance that will shield one’s assets from such lawsuits. There are an increasing number of jurisdictions in the United States that recognize Domestic Asset Protection Trusts.
There are other uses of long-term trusts in asset protection for heirs.
For example: You leave your son an inheritance of $1 million directly — not in trust. He then is driving down the street one day, texting a friend when, unknowingly, his drives into an intersection, hits another car and kills two people. There is a civil judgment for $2,00,000 for wrongful death. His insurance policy is for $500,000 liability. There is a deficiency and his inheritance is wiped out.
Another example: You leave your daughter a $1 million inheritance directly — not in trust. The money is placed in a joint account with her husband. Eighteen months later, the husband files for divorce and claims that the money is marital property.
Most planning conversations, whether for a business in setting up an LLC, or in an estate plan, begin or end with asset protection planning.
It is our commitment to see that our clients have the proper legal documentation in place to protect their hard-earned assets, ensuring that the assets go where they need to go, or stay where our clients want them to stay.