Asset Protection

The main purpose of asset protection planning is to segregate and insulate liabilities away from valuable assets to the greatest extent allowed by applicable law, so as to reduce the debtor’s profile and amenability to lawsuit, as well as to conduct a lawful “asset freeze” by shifting valuable assets to other family members (in trust or otherwise) at a time when the debtor has no existing or foreseeable claims.

Asset protection planning is also pre-litigation and pre-bankruptcy planning that seeks to maximize the use of exemptions allowed by the state and federal legislatures.

Asset protection planning is not meant to cheat legitimate creditors, ex-spouses, business partners, investors, etc., but to protect against potential pitfalls.

Vehicles and Techniques employed include:

Business Entities - a staple of asset protection planning is the use of corporations, partnerships, and hybrid entities such as limited liability companies.

Exemption Planning – There are a number of statutory exemptions from collections as set forth by either Congress or the state legislatures.However, a debtor’s fullest use of exemption planning may be significantly restricted by the 2005 changes to the Bankruptcy Code, unless the planning is done well in advance.

Transactions - Transactionplanning considers the use of various types of transfers to take non-exempt assets off the debtor’s balance sheet and thus render those assets unavailable to creditors. A goal of transaction planning is to avoid the application of the fraudulent transfer laws, which typically requires that the planning be done well in advance of any financial troubles suffered by the debtor.