Many categories of people are exposed to an increased level of risk of litigation: physicians, entrepreneurs, high net-worth individuals.
Furthermore, many elderly people suffer from cognitive decline or disability. Exploitation and elder fraud may be prevented through proper planning.
Protecting assets can be achieved in many legal ways.
Here are the simplest methods of asset protection:
- The simplest way of protecting assets is through joint titling among spouses: assets titled as “tenancy by the entirety” cannot be accessed by the creditors of only one spouse, but only if there is a judgment against both spouses. The protection lasts during the duration of the marriage.
- Retirement accounts are normally also not accessible by creditors.
- Many risks can be covered by adequate insurance, such as malpractice or umbrella liability insurance. For example, physicians who wish to retire may purchase a so-called “tail insurance” that covers prior malpractice. We review and advise on these insurances.
More advanced methods of asset protection are the following:
- Setting up holding companies, such as LLCs and corporations to segregate and protect your personal and investment assets. Extra care must be exercised if non-US persons would own an interest in these entities.
- A trusted person may be appointed successor trustee or co-trustee of a revocable trust to monitor and protect assets from elder fraud.
Finally, the most complex asset protection measures require setting up irrevocable trusts:
- Self-settled domestic asset protection trusts, which are available in certain US states;
- Spendthrift trusts for the benefit of persons less capable to handle their financial affairs in a responsible manner;
- Dynasty trusts to protect the inheritances of future generations.