There are several myths or misconceptions as it relates to asset protection planning. Many people don’t understand the concept of planning the protection of business and personal assets. For that reason, the misconceptions are derived from lack of knowledge. Below are some of the types of misunderstandings and myths that many people have come to believe.
Threat of Lawsuit
One of the most common errors is when someone thinks that they will wait until an individual files a lawsuit against them before securing their assets. By the time that the person files the lawsuit, it would have been too late to protect your assets. The judge will not allow an asset protection plan as part of the evidence if it has been created after the lawsuit. It is important to do so preplanning for your assets. You wouldn’t wait until you got sick to purchase life insurance, would you?
Some people truly believe that no one will actually file a lawsuit against them. In the business world, you have to protect your business against any possible risks and that includes a lawsuit. There are so many lawyers ready to take on a lawsuit. Therefore, if you think that you are exempt, you have to think again.
Little to Protect
Some business owners may not have many assets. For that reason, they will consider it useless to protect those little assets. Your assets do not have to be sizeable to plan for their protection. No matter what your net worth, you should be protected or you won’t be able to absorb any loss incurred through a lawsuit.
Some people think that only an attorney can help with creating an asset protection plan. This is not the case. Yes, the attorney is knowledgeable and experience on a wide range of topics, but not your internal assets. You know more about those (value and importance) than the lawyer does. Lawyers are not taught how to protect assets in law school. However, if the lawyer has some type of experience in offshore planning or collection, then you have a chance. If not, the spotlight is on you. If you feel that this is out of your element, then it is better to meet with an asset protection consultant.
Any asset transfer will be considered a fraud if done after a lawsuit. There are many business owners that will go ahead and make an asset transfer to the next family generation or to a spouse. Never do this because a debt collection lawyer can still file a lawsuit against your loved one. In addition, what if your relatives were to decide not to give back those assets? What would you do then? You could lose everything and your relationship with family in the process.
Many also believe that to set up a workable asset protection plan, it will cost a lot. Yes, if you used the services of a high priced lawyer, then this could be the case. You don’t have to protect your assets by forming complex business entities. Use the services of an expert who will recommend a simply way of doing so.
Be aware of what is involved in an asset protection plan. Seek the advice of a professional, if you are unsure, but stop listening to unfounded myths that simply are not true.