Asset protection planning is the process an individual or corporation takes in organizing their financial assets which makes it difficult for a creditor to seize or place a lean on them in the event of default on a business or personal loan. The process involves changing the form of ownership from unprotected to a form of protected ownership. Unprotected ownerships include titles or deeds in an individual’s name, while protected forms utilize types of ownerships including corporations, limited liability companies, and limited partnerships, some specific types of trusts, and offshore entities, which hold legal title to said assets.
While asset protection planning is legal, one must do so within the confines of the law. Certain actions that have the intention of defrauding creditors is against the law and, if caught, prosecuted, and convicted, it may mean going to prison. In addition, state laws vary and asset protection is not effective in debts to the federal and state tax liens, purchase money retailers, alimony and child support, and mechanic’s liens on real property.
Before engaging in any form of asset protection, the individual, partnership, or corporation should seek professional advice from an attorney. Properly set up, asset protection will discourage most debt collectors from pursuing people. The debt collectors would rather exert their efforts on unprotected debtors, giving them a more realistic chance of collecting. In fact, deterring debt collectors is the main tenet of asset protection. Judgment debt collectors understand the resources, including time and money that it takes to collect on accounts. When faced with a business owner who has a well-implemented asset protection plan, the collector may also be willing to settle the debt for pennies on the dollar.
One should exercise caution when deciding on the professional help needed to establish an asset protection plan. Like any other field, many fraudulent people do not know what they are doing or are only interested in obtaining excessive fees from business owners. The latter is especially true when dealing with people who operate in other countries. In addition to obtaining excessive fees, these criminals may use trickery in their documents that will literally strip the individual of the assets he or she sought protection for in the first place. By consulting with the wrong people, an individual could potentially lose large sums of money and/or assets. In addition, the individual may not have any protection and may possibly face criminal charges.
When making a decision regarding who or what firm to hire to help set up an asset protection plan, one should investigate each prospect thoroughly. Besides the obvious places to find complaints against someone such as the Better Business Bureau, one might consider a proactive approach to finding the right person or business by getting direct referrals from people and/or business owners who already utilize an asset protection program.
When obtaining references from a business that will help establish an asset protection plan, make sure that they provide several ways of contacting each reference, including telephone numbers, addresses, and web sites and/or email addresses. This type of information is very easy to cross-reference and check in order to ensure that the reference company is legitimate.
In conclusion, the more that an individual has to lose, the more the need for a bulletproof asset protection plan. Quality professional assistance in establishing such plan is the first step in doing it right so that the assets are protected and no criminal actions have been committed. In addition, it is important to understand that in today’s world, it is very easy for an individual to be sued for things that occur within one’s company despite established policies prohibiting said actions. These actions may include any type of discrimination, errors made in various departments, or even poor customer service. The business owner should be entitled to keep his or her assets despite the wrong actions or mistakes of employees or any others within the company.
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