There has been an explosion of frivolous lawsuits in recent years.  Examples include the lawsuit against McDonald’s for coffee that was too hot that resulted in a multi-million dollar verdict against McDonald’s.  There was even a judgment for $500,000 against a homeowner when a burglar was harmed during a break-in.

It makes good sense to take steps to protect the assets that you have worked hard to accumulate, especially when you hear about lawsuits like these.  If you have substantial assets that are unprotected, you become a target for such frivolous lawsuits.

The playing field in such lawsuits is not level.  Plaintiffs have an advantage because they do not have to pay for an attorney to handle their case.  Our legal system encourages new theories of liability, meaning that creative lawyers can find ways to sue you that are totally unexpected.  Plus, juries are frequently inclined to side with “the little guy” in these lawsuits.  Finally, you have to pay for the cost of defending a frivolous lawsuit, which oftentimes can be astronomical.  Even if you have insurance covering the claim, you will have to pay for attorney fees up to the amount of your deductible.

A first step in Asset Protection involves purchasing proper levels of insurance.  However, there can be gaps in your insurance coverage and sometimes insurance companies will deny coverage for your claim.  Worse, the insurance company may go bankrupt, leaving you totally exposed.  That is why you need to go further and take steps to protect your assets with structures that make it difficult for claimants to reach your assets.  These structures provide barriers for claimants.  The more barriers you can create, the better protection you have.

These barriers help to level the playing field.  If you have fewer available assets, you might not get sued in the first place because the attorney does not want to take a case where there are insufficient assets to pay a large judgment.  If you do get sued, then you can show the claimant’s attorney that you do not have substantial assets, and then try to negotiate a more favorable settlement compared to what you could have negotiated if you still had all of your assets unprotected.

We explain to clients that Asset Protection is not a cure.  It is like a vaccine.  We hope you never get sued and never need to test the barriers created by Asset Protection.  This is just like fire insurance for your home.  You hope you never need it, but it is there in case a fire does occur.  If you do get sued, Asset Protection is not a guarantee that you will pay nothing.  Rather, it is a way to negotiate a better settlement.

We also explain to clients that Asset Protection is not hiding assets and does not involve tax evasion or other unlawful activity.  We do not assist clients in making transfers of their property that are fraudulent as to current or reasonably foreseeable creditors.  We only assist clients in taking legal action to protect their assets.

You may hear about a number of Asset Protection strategies that sound too good to be true—because they probably are.  For instance, the following are a few strategies that we believe will provide no protection for your assets:

  • a revocable Living Trust
  • Business Trusts
  • Pure Trusts
  • Constitutional Trusts
  • Giving away all assets
  • Giving away assets but retaining the use of the assets

You must be extremely careful in taking steps to protect your assets.  You should not undertake to protect your assets on your own or without legal advice from an attorney who works in this area of practice.

We can help guide you through the steps that are necessary to give you effective, legal Asset Protection.