In a recent interview I did with CBS revealed key things that will help protect your financial estate when facing a lawsuit.
When asked to comment, I said, “Here are a couple of key things to keep in mind to ensure your hard-earned assets are protected if you fall into legal trouble.”
Using sophisticated legal structures when transferring your assets to another name is vital to keeping your wealth secure.
“Transferring your estate from your name to a close family member is tempting when you are faced with a lawsuit. You might think that this is a good way to continue controlling your estate,” I said.
However, I said, things can quickly take a turn for the worse. The person you entitle your wealth to could get also wind up in legal trouble, putting your assets at risk.
When asked to elaborate, I said, “For instance, if you place your estate in your spouse’s or another’ relative’s name and they get sued after being in an accident, your assets could be fair game. Matters could become even more complicated if you decide to get a divorce after placing your financial estate in your spouse’s name.”
This type of transfer could be perceived by the courts as fraudulent.
Fraudulent transfers are defined as transferring assets to another person at a less than reasonable equivalent value to try to defraud the creditor.
“Transferring your funds right as you’re in legal trouble could look suspicious and make it seem as if you’re trying to avoid paying back any debt, which is not the primary purpose behind asset protection planning.”
For this reason it’s crucial to begin the asset planning process in advance.
“Ideally, asset planning should start before you are faced with legal issues. Any transfer of wealth done after you know you are in legal trouble could be deemed as fraudulent, which often involves hefty penalties. This is more common than people think,” I commented.
If asset planning isn’t done in advance, then there’s also the chance that the court could ask for assets that were transferred be paid to creditors.
“Early planning also means that you and an experienced asset planning attorney have more time to work to put together a solid plan, which should include estate planning for when someone passes away, as well as business and tax planning,” I said.