The best form of asset protection is to know a good trial lawyer
and to have your asset protection plan created or at least reviewed
by one who will stand by and defend the plan. Consider these real
life facts: Mr. Smith stops his truck to make a delivery. A drunk
driver comes along and hits a pedestrian running across the street
near Mr. Smith's truck. The pedestrian is crippled. Result? Mr.
Smith gets sued for $20 Million Dollars because he "obstructed"
the drunk's view. (And because he had a "deep pocket".)
Could this really happen? Absolutely. I know first hand because
I successfully defended my client "Mr. Smith". Homeowners,
business owners and employers are all vulnerable to lawsuits. So
is anyone who owns a dog, hunts, owns a gun, a business or operates
a boat or drives a car. Or you may have read about "Cohasset
Lennon" who was sued when a teenager died after leaving
Lennon's son's high school
graduation party where alcohol was allegedly served? I defended
Lennon successfully in both the civil and criminal actions against
him when the D.A. tried to put him in jail and he was sued in civil
Discrimination claims abound and the trend today is for insurance
companies to "deny coverage" on insurance policies that you paid
for. If you have unprotected assets, then you are a "target" with
a "deep pocket" in a civil damages lawsuit. Each year over 25 million
civil lawsuits are filed. You have a probability of being sued several
times during your life. You can insulate and protect yourself from
losing your valuable assets from a lawsuit! If you have more than
$50,000.00 in combined assets, you need to take action. These techniques
in addition to and sometimes in coordination with other techniques
often used in estate planning can insulate you from creditors and
The combined selective use of newly recognized LLC's
(Limited Liability Company's), Limited Partnerships and Trusts
can limit your exposure to financial catastrophe and give you lawsuit
protection. One of the strategies you can employ to discourage
lawsuits is to separate and diversify assets. Having a plan to separate
your safe assets from more vulnerable ones is the first place to
start. A Family Limited Partnership, for example, allows you tremendous
protection against creditors. You can control the partnership assets
without exposing them to creditors if properly drafted.
Trusts, if used in
tandem, can also achieve a measure of protection as can shifting
control to a spouse if that spouse is less likely to get sued. Many
more techniques such as the use of trusts, living trusts, charitable
trusts and trusts for minors can greatly reduce your exposure to
lawsuits as well as providing tax and estate advantages. Seperating
your assets always helps to protect individual assets.
Regarding asset protection of different business
entities: A Sole proprietor has unlimited liability. In Partnerships:
Partners have unlimited liability. Limited
Liability Company Members are not typically liable for the debts
of the LLC. Subchapter S Corporation
Shareholders are typically not personally liable for the debts of
the Sub S corporation. Regular C corporation
Shareholders are typically not personably liable for the debts of
No matter what size your estate, there are basic and inexpensive
things everyone can do to protect assets from creditors: You
should always Prepare a homestead : Filing a Declaration of
Homestead in Massachusetts gives you protection against creditors
for up to $300,000 in the equity in your home. Single persons are
eligible to file homesteads. Disabled persons can be entitled to
EXTRA protection as are persons over the age of 62.
You can also Own your Home by Tenancy by the Entirety (Massachusetts)
This form of ownership affords in many circumstances excellent
protection against creditors for married couples.
A good asset protection plan uses some
or all of the following tools:
1) seperation of assets (very importatnt)
2) personal homestead
3) House held in Tenancy by the Entirety (if married)
4) a personal umbrella policy (very inexpensive)
5) use of Limited Liability companies, trusts and or family ltd
6) title not held in name of person likely to be sued (optional)
7) have a trial attorney prepare your asset protection plan so they
can stand by and defend the plan they created - it costs no more
in the short run but can save all your assets in the long run.
The only other advice I can give you is this: We suit people, win
cases and collect judgements all the time. It is how we make a living.
We have "pierced the corporate
veil" of corporations set up to give their owners asset
protection. Why did those plans fail? Why could we still grab those
assets? Often because the defendants did not do the things necessary
to maintain the corporation
as an asset protection device. Most probably because we know both
sides of the law and have years of experience creating and defending
plans designed to give our clients a suit of armor. And we are quick
to defeat inferior plans created by plan preparers who have no actual
experience in court.
Your asset protection plan is only as good as the lawyer who will
stand by it and defend you.
To receive more information, please call our office for information
regarding your own "Asset Protection" Plan.