Asset Protection

Whether looking to protect your business or the personal assets you have spent years acquiring, the objective to accomplish each is similar. Create enough insulation through various hoops and hurdles to prevent future frivolous lawsuits. Nobody should be sued merely because they have deep pockets. Through proper legal planning you can discourage and defer future creditors from taking your hard earned assets. Of course no one solution will provide 100% protection, each tool will provide varying degrees of protection.

What Asset Protection tools you should consider will depend on what assets you are looking to protect. The following list while not exhaustive provides a preliminary road map for consideration:

  • Liability Insurance- Through home, auto and business insurance policies a lawsuit may not be prevented but there will be funds available to pay any claims. Most importantly these policies will provide peace of mind.
  • Homestead exemptions- In Massachusetts you can file the homestead exemption at the registry of deeds where your principal residence is located. The exemption was just recently increased to protect the first $500,000 of equity in your primary residence.
  • Incorporating a business- This will provide protection of your business dealings from your personal life and vice versa. The business entity selected will determine the level of protection available. Choosing the type of entity should take into consideration more than just asset protection, including but not limited to the potential tax consequences.
  • Gifts or Irrevocable Trusts- Outright transfers to others or through an irrevocable trust, provided they are not done fraudulently will remove assets from a creditors attack. An irrevocable trust must be drafted carefully to ensure this type of protection.
  • Offshore Trusts- The value of the assets seeking protection will determine the feasibility of utilizing such a vehicle. This vehicle like any of the other tools is not meant to hide or fraudulently transfer assets but rather to provide protection from frivolous lawsuits through the utilization of other countries trust laws and the protections that they provide.