Asset protection is an area of law in which your asset protection lawyer works with you to ensure that the assets you have worked to accumulate are legally safeguarded from third parties.
This can include protection from creditors, legally minimizing unnecessary tax liabilities when transferring property, and protection from any other third party attempting to collect funds in the future from your assets, such as future civil plaintiffs in litigation suits.
How to implement an asset protection plan
When implementing an asset protection plan, often a transfer in legal title is used. This can occur by transferring property into a trust account, gifting property to a spouse or child, or investing assets in a limited liability business.
However, creditors can challenge transfers in legal title if there is the appearance that the transfer was not done “in good faith” and instead was done specifically to hide assets from creditors currently trying to collect funds.
There are requirements under federal law that the creditors must prove in order to be successful on a claim that a person fraudulently transferred property, and a thorough asset protection strategy can help mitigate that risk.
Properly transferring title, preparing trusts with the necessary language and provisions, and ensuring that the business in which you are investing has all of the requirements needed to limit a creditor’s access to the funds invested, are all endeavors in which your asset protection attorney can assist you.
If any of the above actions are implemented incorrectly, the creditor, IRS, or other third party collector may still be able to get access to the funds you are trying to protect.
Choosing the best asset protection strategy
Additionally, an asset protection lawyer can review your assets and determine which methods of protection are best for your specific property and goals. Your attorney can evaluate tax provisions, different types of trusts and clauses to include in your trust language, or help you find or create a business opportunity in which to invest your funds for maximum protection and preservation.
For example, if you want to establish a trust, a lawyer can counsel you on your options for trustees and beneficiaries, and which property you can include in the trust to maximize your level of protection for your assets.
Proper language within the instruments you establish is key to safeguarding your assets in the future. Ensuring that your asset protection strategy reflects non-fraudulent property transfers, contains the necessary provisions to protect your assets, and is executed legally so that the provisions themselves are enforceable are all imperative tasks your asset protection attorney can help you accomplish.
Your attorney will be able to counsel you on the specific language needed to prepare an irrevocable trust and establish the requirements for withdrawing funds from that trust – if certain requirements are not put in place on the trust that restrict your ability to withdraw funds freely from the trust for any purpose.
An asset protection lawyer will also know the most current statutes and case law affecting asset protection. As this area of law is constantly evolving, new case law can substantially influence the steps needed to legally protect your specific assets.
To learn more about how to most effectively protect your assets or to meet with an asset protection attorney, contact Cordell Planning Partners.