Asset Protection Planning 101 – Build Your Financial Fortress
May 2, 2013 (edited later)
By: Barry E. Haimo, Esq.
We live in a “lawsuit-happy” society. Litigation has become a popular tool for accumulating wealth by financial predators and their attorneys. They use the laws to their advantage to play offense. You already know it. So what have you done about it to protect yourself, your family and your business? Are you taking advantage of the laws that are put in place for this very purpose? They can help you play defense. Florida is a very debtor friendly state that provides ample vehicles for asset protection planning.
With that in mind, Haimo Law can help you build a financial fortress that protects you, your family and your business, by making your fortress as judgment proof as possible.
What people don’t realize is that many law suits have little to do with right or wrong. Rather, they are in large part based on one party’s intent to extract wealth from another party. I have referred to it as economic warfare. There are 2 basic ingredients in every law suit: a real or imagined injury perceived by the plaintiff, and a defendant who has the ability to compensate the plaintiff for its perceived injury. A variety of causes have been cited for this “Litigation Explosion” including a breakdown of the moral fabric, the loss of the sense of community, too many attorneys, or just the “opportunity of a lifetime”. Whatever the cause, the impact on each of us is significant. If you haven’t experienced it yet, you probably have a friend or loved one that has.
For many people the threshold issue in asset protection is: Do I need it? Many people believe that they don’t do anything dangerous, so it can’t happen to them. However, if you are engaged in any business or professional practice, chances are sooner or later you will be sued. The same holds true for any person with a nest egg, or the likelihood of accumulating one. In that regard, be mindful of high earning capacity and/or the potential for a large inheritance. One does not need to lose one of these lawsuits in order to lose his or her wealth; simply the cost of litigating these law suits can drain your wealth and an unbearable strain on your emotional well-being. With inadequate asset protection, the costs of defending even a frivolous lawsuit can easily reach $50,000 to $100,000. Moreover, you will quickly learn that the system is heavily weighted toward the sympathetic plaintiff, as juries are unpredictable. Jury awards are routinely reaching stratospheric levels, which bear no relationship to the actual damage suffered by the plaintiff. Plaintiff’s lawyers affectionately refer to this phenomenon as “winning the jury lottery”. The potential target for the “jury lottery” winner is the defendant with deep pockets.
The objective of asset protection planning is to legally position one’s assets in such a manner that potential lawsuits are discouraged before being commenced. In other words, you situate your assets so that there is no economic incentive for someone to sue you. Asset protection planning is based on sophisticated, but legal business and estate planning strategies. It’s not new, it’s just not known. It is absolutely critical that you understand that asset protection does NOT involve hiding your assets or making fraudulent transfers to third parties. Such devices are unsuccessful, ruin careers and cause people to go to jail. More importantly, they are totally unnecessary. If an asset protection plan is properly implemented it is both legal and nearly impenetrable.
That’s what we can do for you, your family and your business. It can be too late to engage in asset protection planning so act now before a creditor emerges. Read this to learn what a creditor is and why you should care. Our mission is to help people to protect their families and businesses for the immediate and long-term future. Once you understand the basics of the plan – and once we understand your specific needs to formulate a plan for you, a safe harbor for your assets can be developed and implemented.
Read the next post on asset protection here: https://haimolaw.com/asset-protection-planning-structure-202/
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