Asset Protection Plans

         
         
         
         
                          Asset Protection Plans
         
         
          101) One of the unhappy facts of financial life in our
          lawsuit-happy society is the increasing danger of being
          sued.  And if you should have the misfortune to wind up
          on the receiving end of some courtroom debacle, it
          could easily cost you your life savings.
               One of the best ways to protect yourself against
          such a calamity is to have professionals prepare an
          asset protection plan in advance of any problems.
               Doing so is not expensive, and provides a great
          deal of assurance that you and your family will have
          the benefit of the money you have built up through
          years of work.  Asset protection plans are a relatively
          new area of law, prepared by lawyers who specialize in
          protecting what you own instead of litigation.
               Asset protection is different from traditional
          retirement or estate planning.  It is the systematic
          and integrated protection of your family and business
          from risk.
               Most financial planning is intended to help you
          establish wealth so you can retire, and pass on as much
          of that wealth as possible to your family after death.
               Asset protection plans include estate plans but
          are intended to also help you keep your wealth while
          you are living.  They often involve legal structures
          such as family limited partnerships, children's trusts,
          exempt assets, offshore trust arrangements and living
          trusts.
               Asset protection offers you an advantage over
          other approaches to financial planning.
               For example, more lawsuits are being filed today
          than at any time in history, and the top 80 percent of
          wage earners in the United States will be sued an
          average of five times during their lifetimes.
               Other situations include bankruptcy filings,
          taxation, insurance company failures or bank financing.
         
               Many small businesses are finding that critical
          financing is being pulled out from under businesses
          that are current in their loan payments simply because
          their bank has been sold or merged and no longer wants
          that type of loan.
               If someone slips and falls in a business, or if a
          car taps their car's rear end, they react like they
          just won the lottery.  If an armed thug breaks into a
          home in the dead of night, slips on a child's marbles,
          and breaks a leg, he can sue and likely win.
               A small construction firm is having its monthly
          partners meeting.  They send out for pizza.  Their
          secretary decides to go pick it up.  Unknown to the
          partners this person has a horrible driving record.  On
          the way back the secretary runs into a group of
          pedestrians.  The police arrive.  The secretary eats
          the pizza and the partners are sued.  A judge decides
          that they are liable as the secretary was performing an
          act for the partners in her ordinary course of
          employment.  The jury, sympathetic to the victims and
          enraged by the driving record, awards several million
          in damages.  As partners, all of the owners are jointly
          liable for payment.  In effect, the jury has awarded
          the plaintiffs three condos, two sail boats, three
          houses, nine cars, and twelve installment notes to pay
          the balance over a lifetime.
               A land speculator bought a parcel for subdivision,
          held it for one week and sold it to a developer.
          Later, after houses were built, a homeowner who was an
          environmental engineer noticed an old buried drum.  It
          contained a deadly toxin.  The Environmental Protection
          Agency held the site to be a "superfund" site.  The
          largest law firm in the world, Uncle Sam, began an
          action against the landowners.  The suit brought in the
          land speculator.  Although the total invested was only
          $100,000, the liability exceeded $30,000,000.  Under
          the law this can never be discharged in bankruptcy.
          The builder and the developer collapsed, leaving the
          individual land speculator with an overwhelming
          judgment.
               Asset protection plans are not only for the
          wealthy.  An asset protection plan can be relevant if
          you drive a car, have children, own a business or
          simply want to pay less taxes.
               It can come into action in the event of an auto
          accident, if someone injures himself at your business,
          or possibly in the case of a divorce.
               A restaurant owner could easily be at risk, if,
          even despite his or her best efforts, a patron drinks
          too much and is involved in a drunken driving accident.
          An asset protection plan could protect the owner's
          personal wealth from a lawsuit even if insurance did
          not.
               Similarly, a doctor is at risk of malpractice,
          regardless of the level of the care provided.  Awards
          in those cases routinely exceed the amount of insurance
          coverage.  An asset protection plan could keep the
          difference from coming out of the doctor's personal
          assets.
               Asset protection plans are fully legal.  It is not
          something for people who might want to avoid the law or
          their responsibilities.  The law is clear as to what is
          permissible and what is not.  Asset protection simply
          gives protection against unfair lawsuits and gives a
          level playing field to operate from.
               The goal is to structure the plan so you never
          have to misrepresent yourself or worry about the
          legality of the plan.  A proper asset protection plan
          will also reduce taxes and protect assets from IRS
          seizure.
               The best way to do this is to seek the assistance
          of professionals, and there is now a firm that works
          with clients from all over the country.  They can also
          work with your existing lawyers or accountants if you
          wish.  For a free information package please write:
          Asset Protection Corporation, Suite 201A, 14418 Old
          Mill Road, Upper Marlboro, Maryland 20772.