What Is Asset Protection Program?
An assets protection program is a proactive series of legal strategies that can be used to legally insulate assets from creditors and civil judgments. This method is often employed by businesses and individuals to keep their valuable property or financial resources from being seized by creditors.
It is important to note that an effective asset protection plan should be implemented before a creditor or a judgment has been filed against you, and that attempting to protect your assets after a claim has been made could be considered a fraudulent restructuring of the assets. This could result in your assets being seized by the court.
What Are Some Common Assets That Are Exempt From Creditor Claims?
Many assets are excluded from a creditor’s claims, including retirement accounts under the Employee Retirement Income Security Act (ERISA) and home equity in your primary residence (homestead). Bank accounts can also be transferred to offshore banks, which allow them to remain free from creditors.
Who Should Consider Asset Protection Planning?
People who have significant assets, such as real estate or investment accounts, are often the best candidates for an asset protection program. Any professional whose work carries with it a high risk of liability, such as doctors and lawyers, should also consider an asset protection plan.
A lawsuit is a serious issue, and it can quickly drain your personal and business resources. The Legal Research Network estimates that about 15 million lawsuits are filed in the United States each year.
This number is one for every 12 adults, and that means you have a better chance of being sued than of winning a case in court. It isn’t a good feeling to know that your hard work might be worth less than you thought or that someone else might be able to seize your assets for compensation.
You should make a comprehensive asset protection plan to separate your personal assets from your professional ones and to protect them from the threat of lawsuits or creditors. There are several ways to do this, such as transferring your assets to a trust.
When you’re thinking about asset protection, it’s important to consider your specific situation. If you have a mortgage and are underwater, it’s especially critical to have an asset protection plan in place to avoid losing your home.
Another way to keep your personal assets from being seized is by putting them in the name of an heir or trusted associate. This can help avoid the threat of foreclosure, as actual ownership must be determined.
The most effective and efficient way to protect your assets is by establishing an asset protection trust. Creating this type of trust allows you to transfer ownership of the assets to an independent trustee. In doing so, the trustee will be responsible for the management and distribution of your assets.
As you can see, putting a protective structure around your personal and professional assets isn’t as complicated as you might think. By using a trusted attorney, you can create an asset protection strategy that will keep your assets safe from creditors and lawsuits.