Protect Yourself From Loss With Risk Management Planning
Asset protection is risk management planning that is designed to discourage a potential lawsuit before it begins, or to promote a settlement most favorable to the client. The risk being managed is the legal risk that the client may lose wealth in a lawsuit. It is fundamentally pre-litigation planning.
Although there are exceptions such as statutory exemptions and spendthrift trusts, the law generally frowns upon asset protection. No one has an inherent right to protect his or her assets from creditors, other than state law or federal bankruptcy law provides, so in many respects asset protection takes advantage of legal technicalities in the same way that many tax shelters attempt to take advantage of the tax code: by exploiting the unintended effects of statutes and court rulings intended to do something else.
Non-bankruptcy asset protection can be extremely helpful for consumers with assets to lose, such as liquid assets, small businesses and rental properties, and people who are not good candidates for bankruptcy. At Lord Law Firm, LLC, we help clients develop personalized asset protection plans that help them prepare for the worst while minimizing the potential damage. Contact us to speak to a Columbia asset protection attorney about what this means for you.
Safeguard Your Wealth Against Creditors' Lawsuits
There are many sources of liability that most people encounter no matter how cautiously or prudently they may act in their personal and professional lives. We can help you protect yourself from the loss of assets due to:
- Medical bills
- Motor vehicle accidents
- Accidents or injuries that occur on your premises, or caused by someone else for whom you are responsible, such as an employee, partner, subcontractor, or even a child or family member
- Professional malpractice
- Business debts for which you are personally responsible, including those for which you are a cosigner
- Inability to fulfill an important contract
- Negligence as an officer or director of a corporation
- Taxes and other government claims
- Divorce and separation problems such as a claim from a former spouse
This list can go on endlessly, but the point is that no matter how safe and secure your financial situation may appear today, you can never be absolutely certain that your hard-earned assets won't be in jeopardy tomorrow. What is unfortunate is that many families lose substantial assets when creditor claims arise. Yet any family can legally and effectively protect assets by taking timely and decisive action to fully protect its property before there is a potential claim, not after.
Five Rules for Asset Protection
While there is no perfect strategy that will protect all assets all the time, good asset protection planners employ known strategies that creditors have not yet defeated and strategies that have not been identified. Asset protection is incredibly dynamic. Changes in the law can come quickly and can invalidate even tried and proven strategies.
Rule 1: Act Now
Timely action before you have a problem is the most important ingredient for successful asset protection planning. Generally speaking, it will be too late if you wait until you have a substantial claim against you to do something.
Rule 2: Update Your Planning
Review your program at least annually to ensure you remain fully protected.
Rule 3: Expect Trade-offs
As a general rule, your creditors can attach whatever property you have to the extent of your rights in the property. To effectively place control over an asset beyond the reach of creditors, you must be willing to surrender some control over assets you now completely control. Most people agree, however, that the degree of control they may have lost was a small price to pay for the protection they gained. In some cases, your best asset protection strategy may present adverse tax consequences or interfere with the ideal disposition of your estate. You will need to decide which of these factors is most important to you.
Rule 4: Find the Right Professional Team
Asset protection requires close guidance and cooperation between your attorney, accountant or tax adviser, financial planner and even your insurance agent. Each brings special professional skills to the planning process. Because asset protection has as its prime objective the insulation of assets from creditor claims, choosing the right attorney is essential. Just as you would seek a criminal defense lawyer or divorce lawyer should you be involved with those problems, it is equally wise to engage a legal specialist experienced in financial protection and debtor-creditor law.
Rule 5: Asset Protection is Both Lawful and Smart
Deploying your assets to provide maximum protection from creditors is neither immoral nor unlawful. You have an obligation to yourself and your family to protect and preserve what you have worked hard to accumulate. At Lord Law Firm, we understand and underscore the importance of a legal, defendable plan that can withstand challenge as opposed to a sham or fraudulent transfer that can only leave you as vulnerable as before you started.
Contact us to discuss your situation with an asset protection, estate planning and irrevocable trust attorney serving Lexington and other parts of South Carolina.
