how to protect assets from injury lawyer

Use the law to protect your assets from personal injury lawyers Use “law” not secrecy. Under tax law, there’s an exception under Internal Revenue Code sections (IRC) §671-§678 that allows the original owners of the personal residence to deduct mortgage on interest and tax deductions of real estate taxes paid on your form 1040.

Full Answer

How can I protect my assets from a lawsuit?

Transfer your cash savings to protected accounts. If you have significant cash assets, you may be able to protect at least a portion by putting it in an IRA or other type of retirement account that is protected from lawsuits by federal or state law.

Do I need an attorney to administer an asset-protection trust?

Additionally, the independent trustee or trust company that administers your trust must be located and licensed in that state. An attorney experienced in asset-protection trusts can ensure that your trust satisfies all regulatory requirements and doesn't violate any tax laws.

What is asset protection law?

is proactive legal action that protects your assets from threats such as creditors, divorce, lawsuits and judgments. Call now to let our attorneys help you. The United States is awash in lawsuits.

Do I need asset protection in my bankruptcy case?

In such cases, state law must be consulted to determine whether any protection exists and to what degree. Many U.S. laws protect assets in the event of lawsuits, bankruptcies, and collection agency actions. Purchasing asset protection is often cheaper than leaving yourself exposed to the worst-case scenario.

How do I protect my assets after lawsuit?

The 8 Ways To Protect Your Assets From A Lawsuit You Should Know AboutUse Business Entities. It's important to separate your personal assets from those of your business. ... Own Insurance. ... Use Retirement Accounts. ... Homestead Exemptions. ... Titling. ... Annuities and Life Insurance. ... Get Rid of It. ... Don't Wait to Protect Yourself.

What assets are protected in a lawsuit?

This is a powerful way to protect your assets if you are sued. Asset-protection trusts can hold a wide variety of assets, including cash, real estate, stocks, and more. We can help you decide which assets to place in the trust and how doing so may change the way you deal with these assets in the future.

What assets are not subject to lawsuit?

Certain assets are exempt from creditor claims and from lawsuit judgments. They cannot be touched, and you will not lose them. Some exempt assets include ERISA qualified retirement plans (think 401(k) or pension plans) and homesteaded property.

What is the best asset protection?

Trusts have gained a reputation for being the most effective asset protection tools known today. They have proven to be more effective than any other financial entity at protecting one's assets from creditor claims, lawsuits, and just about any type of legal threat.

What is asset shielding?

Asset protection is a component of financial planning intended to protect one's assets from creditor claims. Individuals and business entities use asset protection techniques to limit creditors' access to certain valuable assets while operating within the bounds of debtor-creditor law.

Can a trust protect assets from a lawsuit?

A living trust does not protect your assets from a lawsuit. Living trusts are revocable, meaning you remain in control of the assets and you are the legal owner until your death. Because you legally still own these assets, someone who wins a verdict against you can likely gain access to these assets.

What assets can be seized?

Assets that creditors can seizeBank accounts.Investment accounts.Inheritances.Assets owned by your spouse.Personal homes (different from state to state)Rental properties.Vehicles.Business equipment.More items...•

What kind of trust protects your assets?

Irrevocable trustIrrevocable trust This type of trust can help protect your assets from creditors and lawsuits and reduce your estate taxes. If you file bankruptcy or default on a debt, assets in an irrevocable trust won't be included in bankruptcy or other court proceedings.

Can I protect my assets after a lawsuit is filed?

After a lawsuit has been filed against you, it’s probably too late to shield your assets. If you try to protect your assets after being hit with a...

Can just one asset protection method do the trick?

Most of the time, there’s no single tool that can shield your assets. Therefore, you may need several layers of protection, such as a domestic asse...

What are some of the benefits of offshore trusts?

An offshore trust can deliver several advantages for specific individuals. For instance, if the country that is home to your trust doesn’t recogniz...

Find Out If You Qualify For Debt Relief

If you’re hoping to protect your assets from lawsuits or creditors, several types of vehicles can help.

Why Do You Need Protection From Lawsuits?

To put it bluntly, if you lose a lawsuit—one filed by a creditor, for instance, seeking to recoup the money you owe—you face the loss of assets such as your home, your car and money in your checking and savings accounts. Furthermore, a lawsuit can siphon money for legal fees, gobble up your time and energy, cause stress and damage your reputation.

How to Protect Your Assets

The approaches to protecting your assets are almost as varied as the assets themselves. Here are nine ways you may consider shielding your assets from a court judgment.

Frequently Asked Questions (FAQs)

After a lawsuit has been filed against you, it’s probably too late to shield your assets. If you try to protect your assets after being hit with a lawsuit, a court may rule that you’re attempting to commit fraud.

What is an asset protection trust?

Asset protection trusts offer a way to transfer a portion of your assets into a trust run by an independent trustee. The trust's assets will be out of the reach of most creditors, and you can receive occasional distributions. These trusts may even allow you to shield the assets for your children.

Which states allow asset protection trusts?

But these trusts can be expensive to establish and maintain. Now a number of states, including Alaska, Delaware, Rhode Island, Nevada, and South Dakota, allow asset protection trusts (APT), and you don't even need to be a resident of the state to buy into one.

What happens if you don't protect your savings?

If you don't properly protect your assets, which you worked long and hard to accumulate, they can be lost very quickly in a lawsuit, bankruptcy, or if creditors come to collect. It's important to be aware of the laws that can shield certain types of assets and the measures you can take to protect your savings.

What is the protection of cash surrender values?

Some protect the cash surrender values of life insurance policies and the proceeds of annuity contracts from attachment, garnishment, or legal process in favor of creditors. Others protect only the beneficiary's interest to the extent reasonably necessary for support. There are also states that do not provide any protection.

What is homestead protection?

Homesteads. The amount of protection you have for your home varies widely from state to state. Some states offer unlimited protection, others offer limited protection, and a few states provide no protection at all. Be sure you know what your state's protections are.

Can you garnish your assets if you file for bankruptcy?

There are many circumstances in which your assets can be attached or garnished, including if you file for bankruptcy, get a divorce, or are on the losing side of a civil lawsuit . Most people don't consider these circumstances until they occur.

Does a trust have to have a spendthrift clause?

It must only allow distributions at the trustee's discretion. It must have a spendthrift clause. Some or all of the trust's assets must be located in the trust's state. The trust's documents and administration must be in the state.

How to Protect Your Personal Assets from Contingent Fee Lawyers

While driving to an appointment, one of your employees remembers he needs to contact a co-worker regarding a meeting. He dials the number on his cell phone, and briefly takes his eyes off the road. In that instant, a vehicle in front of him shifts lanes, and he strikes it, seriously injuring a 78-year-old woman.

Statistics on auto accidents and Personal injury lawyers

More than 42,000 deaths occurred in motor vehicle accidents in 2001. Could one of these have been committed by one of your employees while on company business?

How to prevent personal injury layers from stealing your personal assets

How do you prevent these injurious lawyers from “stealing” your personal assets and keep them at bay? The key is how you own your business. If you own corporate stock or sub “S” stock, chances are that most these lawyers have figured out how to pierce the corporate veil on their way to your personal assets.

How to protect your assets from contingent fee attorneys

What’s asset protection? In my definition asset protection is protecting everything you have or control against pickpocket experts (i.e. personal injury lawyers or any other contingent fee attorneys) who have perfected their profession on easy targets, like you.

Use the law to protect your assets from personal injury lawyers

Use “law” not secrecy. Under tax law, there’s an exception under Internal Revenue Code sections (IRC) §671-§678 that allows the original owners of the personal residence to deduct mortgage on interest and tax deductions of real estate taxes paid on your form 1040.

What is asset protection planning?

Asset Protection Planning. is proactive legal action that protects your assets from threats such as creditors, divorce, lawsuits and judgments. Call now to let our attorneys help you.

What happens when a company is sued?

When your business is sued, the company can shield you from business liability. Corporations Vs. LLCs. That is why it’s best, from a legal perspective, for you to operate your business as a corporation or a limited liability company.

Can a business partner take personal assets?

The more assets you have, the more protection you should seek, whether they are personal or business. Lawsuits with business partners can take personal assets as can personal events such as divorce and foreclosure. And one is well-advised to protect business assets from threats like malpractice lawsuits.

Can you insure yourself but protect yourself?

So, insure yourself, but protect yourself beyond insurance. Keep in mind that U.S. assets are under the jurisdiction of U.S. courts. There are asset protection trusts in the U.S. But the strongest case law history rests with an international trust.

Can you keep your assets separate if you have a joint account?

In the event that the marriage ends in a divorce, this could become a problem for you and your assets. If you think this might be a possibility some day, it could be in your best interest to keep your assets separate .

Can you separate your personal assets from your business assets?

You can separate your personal assets from your business assets. Second, you can separate your assets from those of another person, such as your spouse. Finally, you can separate safe assets from dangerous assets. For example, you would not hold your car in the same LLC that holds your bank account.

Is an IRA protected by federal law?

Individual retirement accounts (IRAs) enjoy protection under federal law as long as they are ERISA-qualified (such as a 401 (k)). Your IRA might have even more protection depending on your state’s laws. Florida has very strong protection for IRAs but the protection in California is very weak.

1. Use Business Entities

It’s important to separate your personal assets from those of your business. If you neglect to take specific legal steps to create a separate business entity, such as a corporation, limited liability company (LLC), or limited partnership, a simple business dispute could well cost you everything you own.

2. Own Insurance

Some professions generate more exposure to liability than others. If you are a financial advisor, an OBGYN, a real estate agent, or a professional in any other field that generates a lot of lawsuits for malpractice, keep your errors and omissions coverage paid up, and, if you can afford to, invest in extra or expanded coverage.

3. Use Retirement Accounts

Federal law provides unlimited asset protection to ERISA-qualified retirement plans, and up to $1 million in assets in an IRA in the event of bankruptcy. Some states provide even more protection to IRAs, though some states have opted out of the 2005 Bankruptcy Reform Act’s federal bankruptcy exemptions and exempt a lesser amount.

4. Homestead Exemptions

Some states provide a lot of protection to home equity, which means that if you declare bankruptcy, the law prohibits courts from awarding home equity to creditors. In some states, including Texas and Florida, state law protects an unlimited amount of home equity.

5. Titling

Examine how your home is titled. If you own your home with your spouse as tenants by the entirety, both you and your spouse own an indivisible interest in the home. If only one of you is named in a suit, creditors cannot force the other spouse to sell his or her interest in the house.

6. Annuities and Life Insurance

Some states provide significant protection to annuity balances and to assets in cash value life insurance policies. For instance, Florida provides unlimited protection to these assets, while Oregon provides protection for up to $500 per month in annuity income.

7. Get Rid of It

NOTE: This option should only be used if you are solvent and the transfer does not render you insolvent.

How does insurance protect assets?

Insurance is a very common asset protection technique. By transferring the risk related to the assets to an insurance company, an individual can, in most cases, protect their assets. A gift that includes property, or a gift of property, removes the asset from the individual’s estate and lessens the risk of creditors attempting to confiscate it.

How to determine if an individual needs to employ additional asset protection techniques?

The best way to determine if an individual needs to employ additional asset protection techniques is to consult with an attorney. An attorney can perform an asset risk analysis and determine the likelihood and extent of possible exposure to creditors. An individual and their attorney, possibly with help from other professionals, ...

What is asset protection planning?

Asset protection planning is applying lawful techniques to protect an individual’s assets from claims from future creditors. These techniques are used to deter potential creditors from going after an individual’s property by making it difficult or impossible for them to get the assets or collect on a judgment against an individual.

Why do creditors settle for pennies on the dollar?

The creditor may also be willing to settle for pennies on the dollar to avoid legal costs. There are some assets that are generally exempt from attacks by future creditors, including: Public or private retirement benefits; Household furniture or furnishings; Personal items, including clothing, jewelry, etc.;

What are some of the techniques and instruments used in estate planning?

These techniques may include: Insurance; Gifts that include property; A Retirement plan; or. Conducting businesses as corporations, using limited liability companies, limited partnerships, or other business entities.

What is a limited liability company?

For example, a limited liability company (LLC), combines the limited liability benefits of a corporation and the management and tax structures of a partnership. It is referred to as limited liability because, in general, members of an LLC cannot be held personally liable for the actions or debts of the business.

What is estate administration?

Estate administration includes the maintenance and distribution of assets after an individual’s death. This process is completed either in accordance with the individual’s will, or, if there was not a will in place, in accordance with local state laws.

What is underinsurance in a lawsuit?

The "underinsurance" component of the passenger who sued you deals with a situation where the passenger has an insurance policy that would pay him or her for injuries sustained beyond the amount your insurance policy would be paying.

What happens if you settle a car accident claim?

If you settle all the claims against you by the passenger of the other car for his or her personal injuries through your own insurance policy in a written settlement agreement and a dismissal of the complaint against you with prejudice, you do not have to worry about protecting your personal assets. The lawsuit against you would be resolved against you for the full amount of your insurance policy where the person suing you hopefully would give you a full release for his or her injuries.

Does the passenger of the other car seek your personal assets?

From what you stated in your question, it does not appear that the passenger of the other car is going to seek your personal assets beyond the amount of your insurance policy for injuries received. In most States, you need to protect your personal assets through a trust or corporation before the events leading to a lawsuit arise.

Is it good to have insurance on your home?

It is always good to have adequate insurance to protect you. One way to protect your home is to file a homestead exemption upon it if the State you live in does not have laws granting the proeprty owner an automatic homestead exemption on their home up to a certain amount.

Why do people use revocable trusts?

Many use revocable living trusts for the sake of avoiding probate, but these trusts offer no defense against creditors, because whoever puts assets into them can take them back out. With an irrevocable trust, on the other hand, you truly give up control of the assets, making them judgment-proof.

Can offshore banks disclose assets?

Some countries do not honor U.S. judgments, some offshore banks will not disclose the value of your assets, and there can be ways to incorporate offshore and take advantage of the foreign nation's tax laws.

Can you build asset protection after a lawsuit?

Unfortunately, as noted, if you start trying to build asset protections after a lawsuit has been filed, it will usually be struck down in court as a fraudulent conveyance meant to defraud a potential judgment creditor. So, to protect assets, you must do it well ahead of time.

Can you insure against sexual harassment?

For example, there is usually no way to insure against sexual harassment suits, breaches of contract, or intentional torts. In those cases, you and your assets are fair game under any circumstances, so the only thing you can do is plan ahead.

Do high risk jobs need insurance?

Traditionally, those in high risk jobs would carry insurance to cover any potential liability. For example, doctors have malpractice, contractors have surety bonds, and so forth. Unfortunately, some insurers have folded or stopped writing new policies, while others have jacked up rates to unaffordable levels.

Do vehicles protect assets from creditors?

Often, the vehicles used to protect assets from creditors are the same you would use to protect assets from taxes, as well.