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Asset Protection

WHY GET ASSET PROTECTION RIGHT NOW?

  • More People are being sued in the United States than ever before. Some of these lawsuites are legitimate but many are frivilous.
  • Those with wealth are often a target or magnet to lawsuits because of their involvement in many activities that increase exposure to litigation.
  • Lawyer contingincy fees have let to the litigation explosion in the US.
  • Insurance, although designed to solve many legal problems may simply become a substituted target and may in fact encourage or attract litigation.

ASSET PROTECTION FACTS

  • If you want to engage in asset protection planning, you need to do so before you have any problems. For if you wait until you have problems, it will probably be too late. You can’t wait until you get the flu to be immunized, and you can’t wait until creditors are banging on the door to start asset protection planning.
  • Asset Protection is not just for wealthy people.
  • Why pay four to five times the cost in attorney fees, when we can set up a sound plan for you that costs less than a cup of coffee a day to maintain?

WHO NEEDS ASSET PROTECTION?

  • Property Owners
  • Landlords
  • Business Owners
  • Sole Proprietors
  • Parents of teenage drivers (accidents)
  • Physicians

These examples are at high risk of having a lawsuit against them at some point.

GOLDEN RULES FOR AN EFFECTIVE ASSET PROTECTION PLAN

Make sure:

  • that your plan is in place before you get into litigation, financial trouble or enter into any personal guarantees.
  • that the planner is familiar with all the asset protection vehicles and understands the strengths and weaknesses of each.
  • the plan is drafted to deter litigation and provide incentive for an early and cheap settlement
  • the plan is user friendly (straight forward) and is incorporated into your personal Asset Protection and Estate Planning goals
 

The field of Asset Protection involves tax planning, estate planning and lawsuit protection. The lawsuit protection area is a primary concern of many of our clients.

Lawsuit protection involves the use of one or more different entities, which can protect valuable assets from creditors and judgments. A very effective technique is an Asset Protection Partnership. This entity is set up as a limited partnership with special asset protection features provisions. You alone or you and your spouse will be general partners with full management and control of all partnership affairs. The two of you will also be limited partners in the form of a Living Trust.

Typically, you will transfer all or most of your personal and business assets into this partnership. The family house, bank or brokerage accounts, and other real estate investments will be transferred into the partnership.

In the event of a lawsuit or judgment, this technique is effective since generally your creditors will not be able to reach inside the partnership and seize any of these assets. Under California law, and the law of most other states, a creditor has no right to execute or levy on partnership assets with a judgment against one of the partners. This provision is contained in the California Revised Uniform Limited Partnership Act, which has been law since 1949.

Under the proper circumstances, the remedy that a creditor can use is called a "charging order." If any cash is distributed to you by the partnership, the creditor can take that cash to satisfy the judgment. If no distributions are made to you, the creditor receives nothing.

The partnership can sell assets and retain or re-invest the proceeds; if no money comes to you, there is nothing for the creditor to take. A creditor cannot take your interest in management and control of the partnership and cannot take any assets of the partnership.

The specific arrangement, will depend on your particular circumstances, the business you are in, and the type of assets, which you own. If you are engaged in any business, or if you own property, you should take the necessary steps to arrange your affairs to maximize the income tax, estate planning and lawsuit protection techniques currently available. A lot of money can be saved if your plan is properly implemented.

If you would like to meet to discuss these matters in more detail, please give us a call. We will be happy to discuss the best plan to accomplish these very important objectives.