Asset protection planning is all about taking chips off the table in good times, so that you still can walk away from the table a winner no matter what happens in bad times.
When it comes to protecting your assets, the best advice is to plan ahead. Waiting for a crisis means you’ll have many fewer options available to protect yourself. If you have valuable assets or your business or profession makes you particularly susceptible to lawsuits, then now is the time to plan your asset protection strategy – before you face a financial or legal crisis.
The caveat to asset protection planning is that you have to do it right. You’re trying to keep those most precious things safe but attempting to do so through illegal and disingenuous means can only come up to bite you in the end, and could land you in jail.
How do you do it right? Qualified legal counsel is your best resource, but there are some good general maxims to keep in mind. Jay Adkisson of Forbes recently offered his 10 rules for asset protection planning. It’s worth a look at the entire list, but here are a few choice ideas to keep in mind:
Plan ahead of time, that is, before a claim arises. Planning before a claim allows you to escape from accusations of fraudulent transfer. Knowingly making a fraudulent transfer is especially dangerous since the judge doesn’t simply undo the transfer, there is likely to be a punishment involved as well.
An asset protection plan is not insurance and does not afford the same protection. An asset protection plan may keep your assets safe in the event of a claim, but it won’t protect you from legal fees. An insurance plan can shield you from paying those legal fees and therefore can offer a vital supplement to the plan itself.
Reference: Forbes (July 13, 2011) “Ten Rules For Asset Protection Planning”Tags: asset protection plan, Bankruptcy, insurance plan, legal fees