Asset Protection
Asset Protection is better
described as Risk Management. In business and in life there are events that occur
that may deplete your resources. Some of the events include weather-related
events, fire, automobile accidents, other accidents, medical emergencies, and
more.
The first line of defense in
protecting your assets is obtaining applicable insurance policies that
indemnify you in the event you are harmed, your property is harmed, or other similar
events occur.
However, it must be remembered
that insurance policies are written in the best interest of the insurer, and often
people are alarmed when they discover their policy does not pay under certain
circumstances, or that the pay-out amount does not cover amount of the loss
incurred.
Other events that can cause
substantial loss or diminution of your assets include the issuance by a court
of a judgment against you, a family member, or your company; and, actions taken
by governmental and law enforcement agencies.
Limited Liability Companies (LLC’s)
LLC’s are commonly touted as
being asset protection vehicles. People are told to simply place their assets
in an LLC and they are protected from lawsuits due to the statutory language
regarding LLC’s called a “charging order”.
Notwithstanding the “charging
order” statute, it is not wise to believe that this means no one can get to the
assets of an LLC; in fact, there are many situations that create a right in the
courts or other governmental bodies to confiscate the assets within an LLC.
LLC’s are useful tools in an
asset protection plan, but they must be formed and maintained properly in order
for you to benefit from using one.
Trusts
Many believe that if you place
your assets in a Living Trust they cannot be taken from you if you owe a
creditor or if there is a judgment against you.
This is not true unless you are
willing to give up ownership and control of your property and transfer it into
an Irrevocable Trust for the benefit and under the control of another persons,
and you do not have any present claims against you, and do not have any claims you
for two (2) or more years afterward. And, even then, if not executed and drafted
properly, this approach will not provide the protection you need.
Homestead
Exemption
Filing a homestead exemption
claim against your property may protect the first $300,000.00 of equity you
have in your home, depending on how long you have owned your home, and
depending on which person or governmental entity is claiming right to the
equity in your home.
Once again, this is a useful
tool, but there are exceptions and conditions that must be met for it to be
useful to you.
Also, whether you have a
homestead exemption filed or not, a judgment lien may still be filed with the
county in which your property resides, and it will detrimentally affect your
ability to sell or buy your home, or other property, in the future.
OK, So What Do I Do?
Asset Protection Plans (Risk
Management Plans) have to be tailored to fit your needs. There are no
standardized plans that will accomplish the type of protection you need. There
are many people who rely on information found on the World Wide Web that is
published by salesmen wishing to sell you “Asset Protection Plans”. Many of
these promoters are former attorneys who have had their license to practice law
revoked, or they are salesmen with no legal training. There are many stories
and complaints regarding these types of scams that can be reviewed at:
http://www.quatloos.com/asset_protection_scams.htm.
The asset protection vehicles
discussed above, and many more, are available and useful. Please consult an
attorney who has experience in the area of Risk Management/Wealth Management and
formulate a plan that will best suit you. Then have the attorney assist you in
the implementation of the plan so that it will bring about the desired result.
Neither the State of Nevada nor any agency of the State Bar has certified any lawyer as a specialist or as an expert. Anyone considering a lawyer should independently investigate the Lawyer's credentials and ability.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Nothing contained on these pages should be interpreted as establishing an attorney-client relationship.
Copyright ©2007 by Salas & McQuigg. All rights reserved.
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