Asset protection planning involves figuring out and applying a
lawful series of techniques that protect your assets from claims of future
creditors. The techniques are designed to deter potential creditors from going
after you, and frustrate them if they do, generally by making it difficult or
impossible for future creditors to grab hold of your assets or collect judgments
In cases where significant sums are involved, asset protection planning often
includes setting up a series of trusts, partnerships and/or off-shore entities
to hold legal title to your assets. A future creditor who recognizes how
difficult it would be to collect on any judgment it may win, might decide it
makes little sense to pursue a claim, or be willing to settle for pennies on the
There is a very sharp dividing line between "legal" asset protection planning on
the one hand, and actions to defraud creditors, which are criminal, on the
other. For that reason it is essential to have an attorney guide you through the
WHY MIGHT I NEED ASSET PROTECTION?
If you are "wealthy", "comfortable" or even if you just have some positive net
worth, most likely you are concerned about keeping what you have, and preventing
others from taking it. This concern is real, as there are people who will take
advantage of any opportunity to take what you have.
If you are a physician you are aware of horror stories about colleagues who lost
everything after being held liable for medical malpractice in amounts far beyond
their malpractice insurance.
Asset protection planning enables you to employ legal techniques to prevent
anyone from taking your assets. However, there are limitations as to what you
can and cannot do.
Your degree of exposure to risk of liability, the type of assets you own, and
your total net worth are essential factors to consider when you and your lawyer
develop a strategy for asset protection. Your occupation can be one indicator of
the risk of liability -- for example, a pyrotechnics engineer has tremendous
occupational exposure. Statistics can help you decide your risk factor, and help
you to assess what kind of asset protection you need.
Insurance is the most common asset protection technique. By "transferring" the
risk to an insurance company, you can usually protect your assets. But even if
you buy insurance, it might not cover all possible risks that you face, or the
amount you buy might not be sufficient, or the insurance company may be able to
deny the claim (perhaps it could claim there were misstatements made in your
application), or the insurance company may become insolvent. Asset protection
planning helps you prepare for these "wild-card risks".
Structures used in the Offshore industry:
Frequently Asked Questions
FIND/BUY RELATED BOOKS!
every effort has been made to ensure that the details contained herein are
correct and up-to-date, it does not constitute legal or other professional
advice. We do not accept any responsibility, legal or otherwise, for any
errors or omissions.
Please go to our
Uses of offshore Companies Page where you
will find interesting information on the benefits of using offshore companies
and trusts for business and personal use, links to information on other
locations and details of our products and services.