Many people question whether even the most complicated and sophisticated asset protection plan actually defeats creditor’s claims, especially where the asset protection plan is designed and implemented close to a judgment being entered or a lawsuit being filed.Evaluating the effectiveness of asset protection depends on having realistic goals and objectives. If by asset protection a person means becoming 100 percent judgment proof, then successful asset protection is difficult, especially if not done several years before problems arise. If, however, one’s goal is to substantially improve their creditor protection and to place the majority of their assets beyond creditor attack, then asset protection success is obtainable if done early and with the help of an experienced asset protection lawyer.
Without any asset protection planning, a client subject to a potential liability or an actual judgment will lose all assets not exempt by the law. With professional and advanced asset protection, collection of a judgment can be made difficult (though never impossible) and the debtor gains substantial leverage in negotiating a reasonable settlement of a creditor’s claim. Therefore, a reasonable goal of domestic or offshore asset protection is to put yourself in a substantially improved bargaining position with future creditors.
Most important, asset protection does not involve either hiding assets or income tax protection. Effective asset protection does not involve secreting assets, and no one should expect that asset protection will reduce U.S. income tax liability.
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