Asset Protection For The Individual

Do I need asset protection? Some say they need it to protect the wealth they have accumulated over the years, but they do not act on it. Others recognize the importance of asset protection due to their liability-prone profession but believe that nothing will happen to them. The vast majority abstain because of a lack of knowledge about why asset protection exists in the first place. Many feel that asset protection is only for the wealthy.

Regardless of the reason, EVERYONE feels the pressing need to protect assets when they are in demand or about to be sued, with large monetary judgment pronounced on them, or during duress situations.

Being sued in the United States is easy. Many attorneys take the case on a contingency fee basis, or free, and then win it after having recovered a substantial sum against you, the debtor. Note that substantial is a relative term. What appears to be a minuscule amount to the executive, say a compensation of $ 5,000.00, can be a huge amount for a recent college graduate.

There is no discrimination in this legal field, and if you have assets, even low value, they can be taken away. The result-oriented judges and juries also show no sympathy. Regardless of the situation, if the facts do not weigh in your favor, the judge will most likely rule.

Furthermore, those engaged in a liability-prone profession are in demand more than usual. Note that a large number of these claims are often downright frivolous and are themselves dismissed. However, frivolous claims are claims too, and hiring a good defense attorney will cost you money.

There is a myriad of scenarios that can put your assets, or rather, your financial future, in jeopardy. Fortunately, many things can be done to help prevent the unwanted result.

The Philosophy behind Asset Protection

Consider the following examples:

Defense Against Plaintiffs’ Attorneys

One of the goals of asset protection is to make it unattractive to sue you. As already stated, the vast majority of claims are taken on a contingency fee basis, or free. If the prospective claimant submits a possible claim, valid or invalid, to the attorney, the attorney will perform a cost-benefit analysis. This includes the following: would the amount of the award, less the attorney’s fee, justify the time the attorney would have spent on the case?

Obviously, the more difficult it is to collect and recover according to the trial, the more the situation is in your favor. In this way, having the assets behind a protection wall, which enforces their security, will have to be dismantled; dismantling, by the way, takes time, and from the point of view of the lawyer charged with collecting the assets, this embitters the cost-benefit analysis.

On the contrary, not having the assets protected, that is, without a wall, will leave them vulnerable. Without any barrier of protection, the collection and recovery of the resolution to the lawyer will be much easier, which would increase the probability of taking the case.

Defense Against Creditors’ Attorneys

Almost all of the above applies here. However, creditors’ attorneys, particularly those who work for banks, do not charge contingency fees, but rather hourly. On the one hand, if the collection and recovery of the monetary judgment prove difficult, that is, that it would take a long time to perform it, the cost-benefit analysis would be in your favor again.

On the other hand, since the banks apparently have infinite funds, it is likely that they spent a lot of it to be able to execute the monetary judgment. In short, what was a cost-benefit analysis for the plaintiffs ‘lawyers becomes a practical question for the creditors’ attorneys: Will it be possible (and practical) to collect and recover the debt?

Still, asset protection is given bargaining power. If the creditor does not leave – and this has happened – they would most likely want to negotiate a settlement. Therefore, having a good asset protection plan will give the debtor the advantage of being able to negotiate an agreement in your favor and make the creditor leave.

The Common Sense behind Asset Protection Planning

The asset protection plan always starts with common sense. Doing your due diligence, of course, like putting verbal agreements in writing, are some measures that prevent future problems. The following is a non-exhaustive list of asset protection planning through the prism of common sense.


One of the most practical and underrated asset protection strategies is to purchase insurance. First of all, insurance is cheap. When comparing the cost of the litigation with the cost of the monthly insurance payment, we see that the financial burden of the former is much greater than the latter.

Also, plaintiffs’ attorneys and creditors are more likely to settle with the insurance company rather than pursue remedy against you in court, especially when it is difficult to collect. This is why asset protection, along with an insurance policy, is a powerful tool. Having insurance allows the debtor to involve the insurance company in the matter. In and of themselves, collection attorneys will focus more on getting payment from the insurance company than on yourself; in essence, it is a shift in the risk of loss.

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