Asset Protection: What is it? Is it right for me?
From the desk of San Diego Asset Protection Planning Attorney, Kristina R. Hess, KR Hess LAW www.krhess.com
What is Asset Protection and Why Should I Care?
Asset protection refers to protecting one’s hard earned wealth from creditors, litigants, and the volatilities of financial markets and the United States economy. Asset protection in reality embodies the very nature of estate planning, the ability to preserve and transmit one’s wealth. Trust law, as is asset protection, is rooted in security and protection of wealth.
One of the biggest threats to one’s wealth is legal threats, especially here in the United States; which is crowned as one of the most litigious places in the world. Legal threats come in two categories, those that are foreseeable and those that are not. Legitimate legal actions from contract creditors are easily foreseeable, and include a debt owed by a consumer to a bank or failing to perform an obligation in a contract. However, there are more unforeseen legal actions, including those stemming from a divorce proceeding or unexpected risks from financial failures of a partner or business associate. Today, lawsuits from auto accidents or from employees claiming wrongful termination, discrimination, or other legal violations are additional sources of peril.
Business owners are more at risk than others. Business owners are susceptible to what some have referred to as regulatory or legislative liability, more specifically the various environmental regulations that govern individuals and businesses. Liability insurance once provided a shield from potential civil judgment those with “deep pockets” are becoming increasingly susceptible to tort liabilities. There are a number of strategies that an experienced asset protection attorney can implement to protect your hard earned wealth. Asset protection planning involves “multiple-entity” structures that include use of limited partnerships, limited liability companies, corporations, various trust arrangements, foundations, retirement plans, and life insurance, to name a few.
Is Asset Protection for you?
Asset protection has long been seen as a tool only for those upper-class wealthy, (millionaires and higher). However, in a country with overzealous civil attorneys and high judgments, if one has something worth protecting, it is in his or her best interest to at the very least consider asset protection planning. Take for example, a judgment for $100,000 (the average settlement for car accidents) but what if there were extensive medical damage, or someone ran a red light, the judgment could be closer to $1,000,000. For most Americans this judgment will be very costly to the family and could result in the lose of one’s property. Asset protection planning ensures long term protection of one’s family and one’s wealth.
Asset protection planning is really for everyone, because everyone has something worth protecting. However, it is important that one does not wait until it is too late when considering asset protection planning. Reactive asset protection planning, that is beginning to protect assets once there is already a lawsuit for example, is very troublesome and is viewed as a fraudulent motive. Courts generally invalidate such reactive asset protection actions. So be proactive and consult your asset protection attorney now.
1 Asset Protection: Dom. & Int’l L. & Tactics §§ 1:2-1.7
This blog is for informational purposes only.
If you would like a complimentary analysis of your situation, contact us at 858-461-6844. KR Hess Law has a strategic partnership with Lodmell & Lodmell on Asset Protection Planning, with the most cost effective way to protect your assets.