Top 10 Asset Protection Mistakes

1. Not understanding the purpose of asset protection

Asset protection will not make a debtor “judgment proof.” However, asset protection may improve the debtor’s settlement negotiating position by making it harder for judgment creditors to levy on assets.

2. Believing that it is too late to protect assets

It’s never too late to improve protection. Late asset protection can still help if the debtor does not hide assets and lie to judgment creditors under oath.

3. Thinking creditors are stupid or lazy

A debtor should never underestimate the creditor’s skill and intelligence. Creditors and their attorneys are not stupid. People should not invent asset protection schemes that they believe are beyond creditors’ discovery and comprehension.

4. Hiding assets

There are no secrets in this world. People cannot hide assets, offshore or anywhere else, to protect them from creditors, the IRS, or former spouses.

5. Fraudulent transfers to family

Debtors cannot protect assets by giving them to family members. Such transfers will make other family members defendants in fraudulent conveyance lawsuits.

6. Falling for asset protection promoters and scams

As asset protection planning has gained popularity, many companies are promoting complicated asset protection. These promoters are usually not attorneys. Their plans are overpriced and usually will not work well in a courtroom. Beware of non-lawyers selling asset protection plans.

7. Confusing estate planning with asset protection

Asset protection is a part of estate planning, but a living trust or self-settled irrevocable trust does nothing to protect assets from creditors.

8. Confusing bankruptcy law and asset protection law

Bankruptcy law does not affect Florida’s unlimited homestead exemption and other exemptions outside bankruptcy court. Debtors have less protection in bankruptcy court than they do in state court, and filing bankruptcy should be a last resort.

9. Giving up control over your assets

The easiest asset protection plan is to give someone else control over your wealth. This is not a comfortable solution in most cases.

10. Relying on a living trust

A revocable living trust in Florida does not provide any asset protection for the trustmaker. Some irrevocable trusts can protect your assets, but they involve giving up the beneficial interest in the trust property.

About the Author

Jon Alper is a nationally recognized attorney specializing in asset protection planning. He graduated with honors from the University of Florida Law School and has practiced law for almost 50 years.

Jon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.