Do you ever worry about becoming the victim of a groundless lawsuit? If so, you're not alone. Lately, society has seen a plague of lawsuits by predatory plaintiffs misusing the courts by filing suits as a kind of legal extortion. As a result, these predators have sent an increasing number of people to attorneys seeking asset protection planning.
What is asset protection planning? Simply stated, asset protection planning seeks to place a client's assets beyond the reach of potential creditors. As the legal maxim says, "If you don't own it, they can't take it from you." While some of the strategies used in asset protection planning are very complex, others are as simple as having an "at-risk spouse" transfer title to property to the name of a non-risk spouse.
For example, if a surgeon and his/her spouse hold their assets as the separate property of the spouse, creditors of the surgeon will have a very difficult time taking the spouse's separate property for the surgeon's debts or judgments.
Another simple technique available in some states is for spouses to own property as "tenants by the entireties." Under this form of title, neither spouse's creditors can force a sale of the property as long as they remain married. More complex asset protection planning strategies involve setting up offshore trusts and other mechanisms that place the ownership of property outside of U.S. jurisdiction in a more "debtor friendly" country.
Between the simple and complex is an increasingly popular asset protection device known as a Family Limited Partnership or FLP. Because of the special laws governing FLPs, creditors of an FLP partner have a difficult time reaching assets placed in such a partnership. Therefore, the debtor will be placed in a more advantageous position to negotiate with creditors.
No discussion of asset protection planning would be complete without taking a moment to address fraudulent transfers. While the law in this area is quite complex, a simple guideline is that a transfer made after a creditor has a claim, or is likely to have a claim, is carefully scrutinized and will not be upheld if the court believes the transfer was made with the intent of defrauding legitimate creditors.
As you can see, all asset protection strategies, whether simple or complex, share the ultimate goal of placing the client's property beyond the reach of future creditors. Asset protection strategies are a legitimate and valuable way to protect what you have earned and are generally successful if properly used.
In deciding if an asset protection strategy will work for you, the best course of action is to seek the assistance of an attorney whose practice is focused on estate planning. Members of the American Academy of Estate Planning Attorneys receive continuing education on the latest changes in any laws that affect estate planning, allowing them to provide the highest quality service.
Attorneys Joseph S. Matricciani and Marc J. Lipchin head the Law Firm of Matricciani & Lipchin LLC, a partnership uniting complementary areas of the law. Joseph S. Matricciani and Marc J. Lipchin together have over a half-century of estate planning experience. With offices in Lutherville, Columbia and Bel Air, the firm offers convenient, quality service, while establishing a new standard of excellence. The firm's main office is located at:
Heaver Plaza, Suite 602, 1301 York Road, Lutherville, MD 21093.
Phone: (410) 828-8787. Fax: (410) 828-5329.
Other Offices in Ellicott City and Bel Air
Web:www.estateplanning.com/law.
Members, American Academy of Estate Planning Attorneys.