Asset Protection

Your one asset protection goal is to ensure that your creditors cannot seize your assets. When a creditor can successfully claim that assets were disposed of in a fraudulent manner, the creditor may recover the assets.

Will your creditor prevail? The answer depends upon whether your creditor can convince the court that your transfer was a mere sham to unfairly and fraudulently place your assets beyond the creditor's reach. The acid test of any asset protection plan is whether the creditor prevails.

Perhaps you scurried to transfer assets shortly after a lawsuit or creditor claim. You possibly tried to salvage whatever possible from the grasp of your creditors through helter-skelter disposal of assets to friends and relatives. Your assets may have been sold for less than fair value, or gifted to a trusted friend or relatives who dutifully would return your property once your financial threat disappears. Or you may be that financially troubled businessman who transfers assets to his wife before filing bankruptcy. These are typical knee-jerk reactions once trouble strikes, but they seldom work.

Transferring assets to a seemingly safer haven may seem the smart way to protect them, but it seldom stops the more determined creditor. Nor will gifting property to a relative or friend succeed. You cannot escape debts by simply gifting assets to friends or relatives, or via other equally transparent attempts to shield assets from creditors. Will your asset protection plan keep your assets 100-percent safe from creditors? Unless your plan can pass the fraudulent transfer test, it is a faulty plan.