How to Protect Your Assets from 
Abusive Claims

Run away jury awards and the growing number of aggressive attorneys willing to pursue marginal cases under a generous contingent fee arrangement have created an avalanche of unpredictable lawsuits in our civil justice system.

Accentuating the encouragement of plaintiff lawsuits is the high cost of defending against even a frivolous lawsuits, which is approximately $94,000 on average, and that is before a trial even begins! Defendants find it cheaper to “settle” with plaintiffs rather than endure the emotional pain and financial risk of a full out battle. These “settlements” are often little more than legal extortion!

Compounding the issue are a whole new genre of legal assaults coming from workplace incidents. Employees and ex-employees have found a lucrative “employee benefit” in suing employers for wrongful termination, discrimination, sexual harassment etc. While some claims must be legitimately addressed, a large percentage of these claims lack merit.

In the face of all this, what is a business or professional person to do?

The answer: Put in place an Asset Protection Plan now, before the litigation starts and it is too late.

What is the first thing Asset Protection accomplishes?  In a word, deterrence.

Contingent fee attorneys are  loathe to launch lawsuits when there is little prospect of recovery. Your asset protection strategy should:

• Deter litigation by minimizing the economic incentive to sue
• Insulate business and family assets from risks and liabilities, without relinquishing asset control
• Install a workplace policy for resolving disputes and claims through arbitration and outside of the court system
• Put your assets out of reach legally, if it becomes necessary

The key is in the planning and design. The tested and solid plans begin with what we call the Asset Management Limited Partnership ™(AMLP). This tool creates the initial legal barrier between you, your money, and whoever wants to take it from you. It is designed to hold “Safe Assets,” such as stocks, bonds, mutual Funds, notes receivable and other liquid investments.

The AMLP may also own membership interests in Limited Liability Companies (LLCs) that hold “Risky Assets” such as investment real estate, boats, airplanes, etc. Once risky assets have been isolated in a LLC, the AMLP can now safely and indirectly hold that property. Keep in mind that LLC members, like the shareholders of a corporation, cannot generally be held liable for the acts of an LLC.

With this basic domestic structure in place, the big gun comes out. The essential tool for deterrence and protection against lawsuits is the Bridge Trust ®. Its mere existence is often enough to scare off would-be litigants in our experience. This proprietary and specifically engineered Trust allows clients to remove assets from the reach of U.S. Courts.

Asset protection planning must be done before the threat of litigation arises. Waiting until you get sued or even until the dispute occurs will make it difficult to do any planning. Also, your Asset Protection Plan should always be tax neutral. Run, do not walk, away from any questionable scheme that promises huge tax benefits. Legitimate asset protection seeks to protect property from future unknown creditors and not to evade income taxes.

Finally, asset protection is a sophisticated area of law and requires an experienced law firm that understands how to structure a plan and defend it if necessary. If done correctly, assets protection can afford you peace of mind now, and make a substantial difference when it comes to safeguarding what you have worked so hard to accumulate.