Asset Protection is a concept that has spawned a new sub-specialty within
the estate planning community. Asset Protection involves the creation of one or more legal
entities to prevent, limit or hinder a creditor's attempt to seize and sell a debtor's
assets in satisfaction of a debt owed by the debtor to the creditor. Usually, the creditor
is seeking payment arising from an award of damages obtained in a lawsuit, but asset
protection will protect against most creditor's claims, regardless of origin.
Asset Protection works by changing the character of the assets held by the debtor from
one that can be easily seized and sold, to an asset that the creditor cannot legally seize
NOTE: The balance of this article has been incorporated into the Tax Prophet's Action Guide entitled, "Wealth Preservation
" described below:
This Action Guide discusses domestic asset protection and the use of legally permitted entities such as limited liability companies and trusts, to preserve assets in today's hostile litigation environment. The approaches suggested are conservative, safe, practical and legal -- a far cry from most asset-protection schemes touted on the web. This Action Guide is a must read for small business owners or investors concerned about potential litigation and their advisors.
The Tax Prophet
All contents copyright ? 2008 Robert L. Sommers, attorney-at-law. All rights reserved. This internet site provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet(TM) is a trademark of Robert L. Sommers.