Don't rely on the internet, television or radio to make your asset protection plan.
February 25, 2012
Nash Law Firm, PLLC
By: Stephen J. Nash
There is a lot of fear today given our uncertain economic conditions. People are worried about losing their jobs, businesses, homes and every else they own. Everyone knows somebody who has lost everything.
Bankruptcies continue to rise, collection judgments are overwhelming the courts, and foreclosures have not gone away.
Unfortunately, there are many myths surrounding your options that people are relying on to their detriment. The following is the top ten myths surrounding asset protection:
1. The Sharks are Circling, But They Will Go Away…. Right?
Creditors don’t feel sorry for you and aren’t lazy. If they smell blood, they will attack. They hire experienced creditor attorneys and will go after you when they feel it is in their best interests. You didn’t really think they were going to try to recover their money, did you?
2. Where’s Waldo? They Can’t Find My Assets, Can They?
In today’s electronic world it is difficult to hide assets. Most assets of any value leave an electronic trail that can be discovered and followed anywhere in the world with a click of a button. By-the-way, is that boat that shows up in your back yard on Google Earth yours?
3. The Burglar Has Already Broken into My Home, No Sense in Putting in an Alarm System Now.
Putting an alarm system in your house after you have been robbed will not get your property back but it will help protect your assets from the next attempt. Asset protection is similar in that it is never too late to improve your protection.
4. What, Me Worry? It Will Never Happen to Me!
Nobody expects bad things to happen but they do happen. In today’s volatile economic world, every employee has to worry about losing their job or having their income reduced and every business owner has to worry about having to close the business down no matter how good you are at your job or business. When income goes down for any reason, your debt level remains unchanged. Preventive asset planning before you have legal and/or economic problems is the most effective and least expensive way to protect your assets. As soon as you experience economic and/or legal problems, asset protection becomes more expensive, your options become more limited and your risk of failure increases.
5. All I Need is an Umbrella and I’ll Never Get Wet!
While it is difficult to go outside when it is raining without an umbrella and expect to remain dry, the mere fact, you have an umbrella does not guarantee that you will stay dry. Asset protection is not a complete shield to all collection attempts. Asset protection may totally shield an asset or it may simply improve your negotiating position by making it harder for judgment creditors to get to that asset.
6. I’ve Got a Workout Plan So My Health is Protected.
Having a workout plan certainly helps protect your health; however, it does not mean you are healthy. A workout can be a vital part of an overall health plan. Similarly, having an estate plan can help protect your assets; however, it does not mean that your assets are protected. A well thought out estate plan can be a vital part of an overall asset protection plan.
7. In the Words of Barnum Bailey, “A Sucker is Born Every Day”.
In a battered economy, middle and upper middle class Americans are faced with economic problems that they never thought they would be facing. They are easy prey to scammers who promote plans to protect them from their creditors with all manner of schemes that are overpriced and often ineffective or illegal. In many cases, these schemes are promoted by non-lawyers who have no knowledge of many areas of law that come to play in an asset protection plan.
8. A Horse is a Horse, Of Course, Of Course….Unless The Horse is the Famous Mister Ed.
Estate Planning, bankruptcy and asset protection may all look and sound the same to you but they really are three different areas of law that overlap. Teach offer different protections and have different vulnerabilities when applied to your situation and must be coordinated to result in the best outcome for you depending on what happens in the future.
9. It’s Yours …..“Wink Wink”
Often people believe that they can transfer the asset but still retain control over the asset. You can’t have it both ways. If it is an absolute transfer, you no longer own or control the asset. If you in actuality retain control over the asset that you purported to absolutely transfer, you run the likelihood that the transfer will be seen as a sham. In order for your asset protection plan to be effective you often will have to give up some or all control over your assets. If you are to retain some type of control, it has to be done in a legally proper way.
10. It’s Not Mine, it’s the Family Cabin.
Creditors do not care whether the cabin was supposed to stay in your family forever, if you own all or part of the cabin, they will go after it even if it means the cabin has to be sold. If you argue that you are in title but are really holding for others, you are much better off putting title into its proper state as a part of your asset protection plan before you experience legal or financial difficulties.
Asset protection is an important but complicated activity. An asset protection plan that is based on myths fails to protect your from valid threats while creating vulnerabilities that previously did not exist. Many areas of law come into play and a person’s age, wealth, risk tolerance, hopes and goals must be balanced. A poorly thought out asset protection plan, is a recipe for disaster. While professional guidance is not free, the alternative is much more expensive. If you need an asset protection plan, contact us today.
The foregoing is not intended to constitute legal advice for any specific circumstance, but is intended to reflect broadly applicable principles, under Minnesota law, relevant to a typical situation. Each set of facts and each contract is, or can be unique; the unique facts and specific language of the contract may require a different legal analysis and may result in a different outcome. Before proceeding in reliance upon this or any other general description of law, consult with an attorney competent in the field of practice relevant to your situation.
Copyright 2012 Nash Law Firm