What Is Asset Protection?

Asset protection means protecting your assets from creditors. A better definition might be pre-litigation planning to prevent lawsuits and push out of court settlement. The point is not only safeguarded assets from attacks but minimizing the amount of time you spend dealing with attacks (so you can spend more time).

What’s interesting is that very little writing about the subject of asset protection. There are no legal case books written about this problem; there are no classes taught in law schools, and very few books written for curious minds. The term “asset protection” does not appear in state law or the U.S. Code. Very rarely even find a subject written in legal dignity.
I recently attended a continuing education class for lawyers (I am not a lawyer). This one-day course is designed to help lawyers “find assets” of their opponents. Although interesting and informative, classes not taught by someone who experienced in debtor-creditor litigation. A theory does not often blend with the protection of real-world assets.

For example, can you imagine that someone would plan 20 years before to protect themselves from a reckless lawsuit? Or that someone will sell options on their real estate to cover ownership (in the event of an attack)? Or that someone deliberately burdens their investment to give the impression that there is no equity? The best asset protection plan is one that can be reviewed and approved by the judge in court (assuming the judge knows the TRUE question to ask).

The legal system is so unpredictable that most people with serious money and assets will not allow accidental asset protection. The boilerplate document will not be adequate for a good asset protection plan. Professional help must be sought if you can find it. Solid planning requires well-made documentation.

There are three main areas of concern in protecting yourself — first, your income, then your assets, and finally, your physical well-being. We have talked about someone who uses your income by using your credit illegally (i.e., Identity Theft). This prevents you from being able to buy more assets or make you and your family a lifestyle. Another way to attack your income and assets simultaneously is to sue you. One in every 15 people will appeal in the next five years. Every year fake creditors, fake lawsuits, and IRS steal assets and income from people like us because we fail to protect our assets adequately. How to prevent this from happening to you?

Adopting a philosophy/attitude is undoubtedly your first line of defense. Keeping humble, not bragging about your ownership, living a moderate lifestyle (at least locally), and buying the right insurance (we encourage our students to buy a lot of liability insurance AND umbrella responsibility policies) are good habits to build. But these actions alone do not guarantee that you will not be sued and lose everything for a fast money artist and lawyer (and your lawyer too – it is expensive to defend yourself from a lawsuit).

The next step is to list all your assets (you might have done this for your financial statements) and analyze every one of them. Most of us have developed attitudes about our assets that project images to the public that can paralyze us when we are most vulnerable. Now is the time to “regulate” our assets and property before an attack launched against us.

If you see rich people in this country and learn about their habits, you will find that they benefit from assets but don’t “own” a lot. In other words, they have learned how to enjoy the results of their work without risking their heads. How do they do it? First, they choose several small assets to have on their behalf. This gives the illusion that when you find these assets, they are all theirs.

Some pursuers will stop here. However, real assets are hidden in land trusts, personal property trusts, companies, foundations, limited family partnerships, fictitious names, nominations, agents, lawyers’ trust accounts, holding accounts, options, and so on and so on. When set correctly, the user has the full benefit of the asset, but he cannot legally control one of them. Therefore, assets are beyond the reach of all their creditors!

The first step in a solid asset protection plan is to place ALL of your property in separate Land Trusts. This protects each property from others. This can be done efficiently and cheaply if you learn to do it yourself. We teach people throughout the United States how to enter their property into Land Trusts.

This article is only the beginning if you are interested in protecting your assets. As you can see, this is a complex topic and requires more education to achieve the goal of protecting your assets.