Some view asset protection planning with a skeptical eye. They believe there is a moral obligation to pay ones debts. They think that asset protection planning is immoral because it prevents a creditor from collecting on a judgment entered by a court.
The truth is the U.S. justice system is unpredictable. Defendants are faced with ever-expanding theories of liability, being sued just because they appear to have “deep pockets,” and judgments entered against them based on desired outcomes instead of the law.
What, then, can you do that will ethically and legally protect your hard-earned assets from creditors, predators, and lawsuits?
What Asset Protection Planning Is, and What it Is Not:
The first step in protecting your assets is to understand that planning to preserve and secure your property in advance of a claim, or the threat of a claim, is a legitimate form of wealth planning. The goals of asset protection planning are to:
Provide your creditor with an incentive for settling a claim;
Improve your bargaining position;
Offer you options when a claim is asserted; and
Ultimately, deter your creditor from filing that lawsuit.
On the other hand, asset protection planning is not about avoiding taxes, keeping secrets, hiding assets, or defrauding creditors. In addition, it will not be effective to shield your property from an existing claim, and it should be done before there is even the hint of a claim.
When Done Right, Asset Protection Planning is Completely Legal and Ethical.
Using all legal tools available to help clients protect their hard-earned assets from future claims is consistent with the rules of professional conduct that govern the actions of attorneys. In fact, these rules require attorneys to pursue representation of their clients with diligence and advocacy. What these rules do not allow, however, is assisting or counseling a client in fraudulent or criminal conduct.