Do you ever worry about becoming the victim of a groundless lawsuit? If so, you're not alone. Lately, society has seen a plague of lawsuits by predatory plaintiffs misusing the courts by filing suits as a kind of legal extortion. These predators have sent an increasing number of people to attorneys seeking asset protection planning.
What is asset protection planning? Simply stated, asset protection planning seeks to place a client's assets beyond the reach of potential creditors. As the legal maxim says, "If you don't own it, they can't take it from you." While some of the strategies used in asset protection planning are very complex, others are as simple as having an "at-risk spouse" transfer title to property to the name of a non-risk spouse.Often overlooked as an asset protection device, liability insurance is a worry-free first line of defense as long as the insurance clearly covers the risks that you are concerned about and as long as the coverage is sufficient (in dollars) to cover any court judgment for which you may be found liable.
Between the simple and complex is an increasingly popular asset protection device known as a Family Limited Partnership or FLP. Because of special laws governing FLPs, creditors of an FLP "partner" have a difficult time reaching assets placed in such a partnership.
No discussion of asset protection planning would be complete without taking a moment to address fraudulent transfers. While the law in this area is quite complex, a good rule-of-thumb guideline is that a transfer made by a debtor, after a creditor has a claim or is likely to have a claim, is carefully scrutinized and will not be upheld if the court believes the transfer was made with the intent of defrauding legitimate creditors.
As you can see, all asset protection strategies, whether simple or complex, share the ultimate goal of placing the client's property beyond the reach of future creditors. Asset protection strategies are a legitimate and valuable way to protect what you have earned and are generally successful if properly used.
In deciding if an asset protection strategy will work for you, the best course of action is to seek the assistance of an attorney whose practice is focused on estate planning. If the attorney is not experienced in the type of asset-protection you want, ask him or her to refer you to an attorney who is experienced in that type of work.
To arrange a no-cost private consultation on this or other estate planning subjects, or to get information about an upcoming no-cost seminar, contact Holm-gren at the Salt Lake City law firm of Holmgren & Mitton, L.C. 366-9966 or e-mail to [email protected] Also contact Mr. Holmgren if you have a question or issue you would like to see addressed in an upcoming article.