What is asset protection? Why it is so important? When it should start?
Asset protection refers to keeping property safe from others attempting to acquire it through a lawsuit. This can result from a lawsuit relating to an act of negligence of the property owner (like a car accident) or a foreclosure of the property in which the property owner stopped paying the mortgage.
Start Planning, Now.
The time to begin asset protection planning is now. Every day without a plan is a day where you are liable for losing your assets. Planning takes assets subject to creditor claims, known as nonexempt assets, and re-positions them so they are out of reach to creditor claims. These assets are referred to as exempt assets.
If a potential judgment creditor looms, start your asset planning immediately. State laws protect judgment creditors against those who transfer money or other assets out of their name with the aim of hindering, defrauding, or delaying a creditor. In such situations, the court sees through the fraudulent transfers, orders their reversal, and turns the assets over to pay the debt in full or partially that is owed to the creditor. Asset protection planning must begin prior to the lawsuit.
Sidestep Common Asset Protection Mistakes
Do not attempt to start asset protection planning after the filing of a lawsuit. Some have made the common mistake of attempting to begin this planning process even though they anticipate a lawsuit from a creditor. In the end, asset protection planning should be thought of as long-term planning that should be started as soon as possible. It is not a quick fix yet it will help protect your property against those who are out to make a quick buck.
Integrate your financial goals with your estate planning goals, position or re position your assets for protection against creditors, and your comprehensive asset protection plan will be set in place. This way, if a creditor wins a judgment against you and shows up at your door, you will be in an excellent position to reach a quick settlement for a fraction of the original debt.