There is possibly no greater blow to a person than losing all their assets to creditors. It can happen to anyone, but you can protect against it by utilizing estate planning tools.
You have probably noticed at one point or another that the U.S. is a very lawsuit-happy country; much more so than most European countries.
The reasons for this have a lot to do with the way that our court system is set up. Anyone can file a lawsuit for almost anything. There is very little to deter someone from doing so, in most cases.
Even if the plaintiff loses, he does not have to pay the defendant’s legal bills, which can be quite high. Consequently, no matter how wealthy a person is, they can be sued and potentially lose everything if the court system rules against them, rightly or wrongly.
Therefore, it is extremely important for people to protect their assets from potential creditors, as the Wills, Trusts & Estates Prof Blog discussed in “Asset Protection Measures.”
The good news is that protecting assets from potential creditors is not an inherently difficult task.
Estate planning attorneys have many ways to assist clients in doing that.
A type of trust (there are many) is typically the best option for doing this. However, there are other ways to protect assets, including utilizing retirement accounts and college savings plans.
As a last resort, insurance can be purchased to protect against creditors.
You should protect your assets, and you should visit with an estate planning attorney to determine the best way to do so. Our legal system is designed so that planners win. If you don’t plan, by the time a lawsuit is filed it will be too late to implement asset protection measures.
Reference: Wills, Trusts & Estates Prof Blog (May 31, 2017) “Asset Protection Measures.”
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