Asset protection laws deal with the protection of a person’s assets against future creditors. These laws can’t be used to avoid having to pay what you already owe to existing creditors or to get out of existing obligations. Asset protection also includes protection of assets from lawsuits or from one’s own poor decision making. It is also helpful in cases where a person is feeling insecure and he or she does not want to rely on their own decision making to manage their assets because of certain reasons like health problems, advanced age or inexperience.
There can be a lot of confusion between asset protection law and estate planning. The two are actually very distinct from each other. Estate planning is used to avoid paying taxes; you must give up all of your rights and control over your money. You cannot access, use or control your money or change the beneficiary of your money. Asset planning laws also require you to give up your right to the money you want to protect. For example, if you wanted to apply asset protection laws to your bank account, then despite the fact that you have to give up your right to it, you still have a right to benefit from the interest your bank account earns and you can still control your bank account. Also, whatever you can get, the creditors and predators can also get.
What is the role of an Asset Protection Law firm or Attorney?
Asset protection is a particularly complex and murky area of law that the average layman will find very difficult to navigate through. If you plan on placing your assets under protection, it is essential that you have an experienced professional guiding you. A reliable asset protection attorney will be able to help you protect yourself against fraudulent transfer claims, maximize the potential benefit you can have from asset protection plans, make sure that your asset protection plans and strategies are executed correctly and give you sound council when the need arises.
Furthermore, an Asset Protection attorney will inform you of all the possible threats to your financial wellbeing and different ways in which your assets could be lost. For this reason, it is in your best interests to work with an experienced attorney or firm which can give you a personalized evaluation of the biggest financial threats to you and your assets in particular. A competent attorney’s next step would be to inform you about the asset protection tools at your disposal and which of them would be best for you to utilize in protecting your assets. Some of these are:
• Insurance policies - Certain kinds of insurance policies will protect you from financial losses resulting from unforeseen circumstances. For example, liability coverage provides you with protection because legal fees and damages will be paid by the insurer in case of a lawsuit. Health insurance works similarly when it comes to paying medical expenses for an unforeseen accident or disease.
• A power of attorney - A power of attorney is a powerful asset protection tool, and could be the best asset protection tool for you to make sure your money is appropriately managed in case you become incapacitated because of an accident, disease or old age. The person to whom you give the power of attorney will be performing a fiduciary duty, making him or her bound by law to work in your best interests.
• Living trusts - A living trust is a useful asset protection tool that you can use to protect the wealth you have accumulated over your lifetime in case you become incapacitated. A living trust puts a backup trustee in charge of asset management in case you become incapacitated. Living trusts are also useful at transferring assets after your death while avoiding the probate process.
• Irrevocable trusts - Irrevocable trusts are able to provide protections that living trusts cannot. This includes protection of your wealth in case you are seeking costly nursing home care.
• Strategic investments - Putting your money into IRA or other accounts that have been given special status under the law can protect your wealth because those accounts are protected from certain losses. For example, these accounts can be protected from liquidation in case you file for Chapter 7 bankruptcy.
• Pre-nuptial agreements - Pre-nuptial agreements have long been a tool used by individuals getting married in case of a future divorce claim. While you may have a girlfriend or fiancé with whom you currently have a good relationship with, things can fall apart very quickly in a great number of relationships and in cases of marriage, money can quickly get involved. A pre-nuptial agreement will allow you to lay a protective legal force field around assets that you wouldn’t want to risk in case of a divorce.
When choosing an asset protection firm to represent you and handle your asset protection plan, it is important to find out how long the firm or attorney in question has been implementing asset protection programs and strategies, and to go for the most experienced option you can find and afford. It is also important that your legal representation has adequate knowledge of tax laws. The more extensive the firms tax experience, the better it is, as offshore tax protection requires a very broad knowledge of tax law.
Inquire about the firms rate of success, and any significant percentage of failure should have you concerned. In cases where the firm wasn’t successful, ask about how creditors were able to get to the clients assets despite the firm’s efforts. Also ask if the firm can point you to third parties or clients that can recommend their services. Attorneys whose practice works on offshore asset protection will have worked with trust companies, financial advisors and protector companies to properly implement their client’s asset protection strategies. Contacting these third party professionals will give you an idea about the competency and rate of success of the firm or attorney in question. You may also want to check for any reviews and testimonials online or on the company website of the attorney or law firm.