ASSET PROTECTION PLANNING
Asset Protection Planning
Asset protection is a set of legal techniques and a body of statutory and common law dealing with protecting assets of individuals and business entities from civil money judgments. Technically, asset protection planning is the debtor’s side of creditor-debtor law. While creditors are concerned about the strategies and techniques of collection, debtors are interested in the strategies and techniques for protecting their most valuable assets from potential creditors.
Asset protection planning is a significant part of our firms law practice. Absolute Law Group represents many doctors, dentists and other health care professionals. Absolute Law Group also represents many high-net worth individuals and entrepreneurs. The tools we use are legal, ethical, and customary in this type of planning. We do not use tools that are not sanctioned by the Internal Revenue Service or that would be seen objectively as seeking to defraud a creditor.
Asset protection planning should be based on the presumption that the entirety of the planning and its purpose will eventually become known to creditors, because one way or another it usually does. Asset protection plans that require secrecy will face a plethora of problems, from how not to disclose the structure or activity on tax returns, to how to keep a mad ex-spouse or disgruntled employee from talking to creditors. In order for asset protection to be effective, it must be done before a lawsuit happens. However, if the lawsuit is already underway, or even if you anticipate one coming, it may be too late to do anything that protects you from any future judgment in that instance.
Most importantly, not all asset protection tools are the same. For example, where you form an entity can be as important as forming the entity itself, because not all jurisdictions are the same. Some jurisdictions where you form an entity provide better protection than other jurisdictions. The primary purpose of entity-based tools for asset protection planning is to provide multiple layers of defense, protecting your personal assets from the creditor seeking to seize those assets in a judgment. A secondary purpose is to allow an opportunity for early settlement at significantly less cost in the event a lawsuit does occur.