The United States as a whole has become an extremely litigious society over the past several decades. California is no exception to this general rule. Hundreds of lawsuits are filed every day throughout California. While some lawsuits have merit, many do not. Yet, even a frivolous lawsuit could result in a substantial judgment against you which, in turn, could lead to the loss of valuable assets. Business owners, professionals, and property owners are all at risk for losing assets which is why asset protection is an important component of any estate plan.
Most people operate under the assumption that insurance will cover any liability they incur. What many people do not realize, however, is that even if you have insurance coverage your assets could still be at risk if the insurance carrier denies coverage or if the damages exceed the policy limits. Consider just a few of the situations that could put your assets at risk – many of which you may not even have thought of:
- Professional malpractice liability
- Personal liability of corporate officers and directors
- Lawsuits by former business partners
- Personal injury suffered on your personal or business premises
- Personal injury resulting from a motor vehicle accident
- Liability as guarantor for the debts of another
- Liability arising from misconduct
Asset protection ensures the assets you build over your lifetime are not susceptible to being lost to the government, nursing homes, lawsuits, divorce, bankruptcy, or other predators. Asset protection is broken down into two key considerations; protection while you are alive and protection after your death. If protection during life is sought, the question is whether you want to protect from creditors and predators or nursing homes, or alternatively protect from taxes at your death. There are strict rules on how to protect your assets during life or after death, but they are easy to accomplish when done properly.
The good news is that most, if not all, assets can be protected by using proven legal strategies and techniques to create an asset protection plan. The key to protecting assets is often to make them legally unattainable by transferring them out of your name and into a trust, foundation, or other legal entity. Assets held by a properly drafted trust, for example, are typically inaccessible to creditors of the trust beneficiaries.
There are a variety of asset protection trusts available but they all work very differently. Some allow individuals to retain control of their assets, and even use or benefit from them, without subjecting them to your creditors and predators. Others, however, prohibit the owner from controlling or benefiting from the assets. Some asset protection permits the individuals creating the trust to change and modify the trust during their lifetime and utilize the trust assets for family members and other intended beneficiaries, but others prohibit any such changes.
The asset protection attorneys at Sowards Law Firm help clients protect hard-earned assets in Santa Clara, Point Reyes and Sunnyvale as well as the surrounding areas. To get started on your asset protection plan, contact the firm today by calling 408-371-6000