The key to effective asset protection planning is to start early. If you take action while things are good, you will be protected if you get caught in difficult situations later. More importantly, by taking action now, you can help protect yourself from being held in contempt or for fraud. Below are a few general pointers if asset protection planning, but it is imperative to obtain legal counsel regarding your unique situation.
- Plan Now. There are many protective measures you can take now before a claim arises that you will not be allowed to do afterwards because after a claim arises, your actions could be considered “fraudulent transfers.” In fact, attempting to protect assets after a claim arises will typically make matters much worse.
- Insurance. It is important to maintain liability and professional insurance. Asset protection planning is not a substitute for these types of insurance, but rather a supplement to them.
- Trusts. Your personal assets are not always protected just because you have a business entity such as a LLC, corporation or partnership. Personal assets can be put into jeopardy if a creditor pierces the corporate veil or successfully proves an alter ego theory. Thus, it is important to place personal assets into a properly drafted trust and take steps to properly fund the trust.
- Control. You must find a balance between retaining some control over the assets, but not too much that a creditor will be able to successfully argue that the debtor and the asset protection structure are alter egos or essentially the same.
- Simplicity. This may seem counter-intuitive, but having an extremely complicated asset protection plan can backfire. You should assume that at some point your plan will be reviewed by creditors and/or a judge. If you cannot explain how the assets are held or why they were transferred, your creditors and/or the court are likely to get suspicious.
If you are interested in learning more about asset protection planning, let us help. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.