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.
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.
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: Asset Protection Scams
. 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.