Asset protection planning is all about taking chips off the table and out of play when you can, so that you still can walk away from the table a winner even when those losses come.
When it comes to protecting your assets, the best advice is to plan ahead. Waiting for a crisis means your options to protect yourself will be very limited. If you have valuable, non-exempt assets or your business, trade 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. Trying to keep those most precious things safe by attempting to do so through disingenuous (and potentially illegal) 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 his 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 helps to deflect accusations of fraudulent transfer. Waiting until after a claim, or reason for a claim, arises to start moving assets out of your own name can be especially dangerous since a judge might not simply just 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. A good insurance plan, including an umbrella policy as well as the usual liability policies, can help shield you from paying those legal fees and therefore can offer a vital supplement to the asset protection plan itself.
Reference: Forbes (July 13, 2011) “Ten Rules For Asset Protection Planning”