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10 Biggest Mistakes in Asset Protection Planning

February 11th, 2015

Posted in Asset Protection,Estate & Personal Planning,General Practice

  1. Not Understanding the Purpose of Asset Protection: Asset protection will not make you “judgment proof.” Someone can still obtain a judgment against you.  You must distinguish obtaining a judgment and collecting on a judgment, which is typically only done after a judgment is rendered.
  2. Waiting Too Long To Begin Planning: Preventative planning is both most effective and least expensive before you have legal problems.
  3. Believing That It Is Too Late To Protect Assets: It’s never too late to improve protection. Anything is better than doing nothing.
  4. Thinking Creditors are Lazy or Not Smart: Don’t underestimate the skill and intelligence of your adversaries. Creditors and their attorneys are not lazy or thoughtless.  The court system can be a slow process.
  5. Failure to Comprehend Vulnerability of Your Business: The shares of stock or membership interests you own are vulnerable to creditor attack.
  6. Fraudulent Transfers and Conveyances: You cannot protect assets by giving them to family members.
  7. Misunderstanding Salary Exemption: Salary exemptions can be complicated. Don’t be trapped into misunderstanding these concepts, especially for business owners.
  8. Confusing Estate Planning With Asset Protection: Asset protection is oftentimes part of estate planning, but a living trust or will does nothing to protect your assets from creditors.
  9. Confusing Bankruptcy Law and Asset Protection Law: The new bankruptcy law does not affect Florida’s unlimited homestead exemption and other exemptions outside bankruptcy court.
  10. Giving Up Control Over Your Assets: The easiest asset protection plan is to give someone else control over your assets. This is all too often a poor solution.

If you own assets and are concerned about protecting them, avoid making the mistakes mentioned above.  For more information on developing an asset protection plan that is thorough and unique to your particular situation, we encourage you to contact a qualified, licensed attorney.

 

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