Asset & Privacy Protection

Asset protection is an integral component of risk management. Why is asset protection important? Because you’ve worked hard to create your estate and you want to protect it for yourself and for your heirs.

Basic estate planning focuses on smooth transition of property upon death. Unfortunately, the lifetime side of estate planning is often ignored, but planning to preserve your assets during your lifetime is essential. In fact, the protection and preservation of your estate during your lifetime is at least as important as protecting and preserving it after death. Some of the numerous risks to the assets in your estate during your lifetime include identity theft, creditors and lawsuits. With a well structured Asset Protection Plan, your privacy can be enhanced, and these risks can be minimized.

Take the example of Joe Smith, a dentist. He owns his own practice, his primary residence, a vacation home, and a couple of rental properties. He has prepared a living trust and feels secure that his heirs will be protected from large estate taxes. What he doesn’t realize is that if he doesn’t hold title to his homes and his practice in the proper manner, he could lose everything to a creditor. Maybe he has a disgruntled patient who sues him for all he’s worth. Joe could lose not only his practice but his homes and rental properties, too. Joe’s assets can be seriously threatened by legal liability, overly-generous judges and juries, expanding theories of legal liability, and the unavailability of affordable and adequate insurance coverage.

An Asset Protection Plan can make Joe’s estate less vulnerable to the ravages of litigation and creditors. But to make it really work, the Asset Protection Plan should be made before there are any actual threats to the estate. Asset protection is similar to insurance in that both need to be put in place before a catastrophe hits and both need to be considered part of risk management. In an ideal world, you would never have to use your liability insurance, and in an ideal world your Asset Protection Plan would never have to be put to the test, but reality dictates that it is foolish to assume the risks of the real world won’t have an impact on you or your business.

Asset protection is NOT a form of evading taxes. Asset protection does not hide assets; it secures and protects assets. And asset protection is certainly not a means of defrauding creditors. Asset protection takes advantage of vehicles such as:

• Family Limited Partnerships
• Limited Liability Companies
• Domestic Trusts
• Foreign Asset Protection Trusts

Many plans combine more than one asset protection vehicle, depending on the type of assets being protected. Asset protection plans also incorporate expertise from more than one field, including estate planning, taxation, civil procedure and debtor- creditor law, so having knowledgeable legal guidance is essential. If you have questions about asset protection or would like to know whether or not you should be developing an Asset Protection Plan, contact Parr Law Group to talk with a lawyer who is well versed in the complexities of asset protection.