How To Keep Your Assets Safe

The legal techniques that protect a person's property from creditors and lawsuits represent what is called personal asset protection. Asset protection is based on the idea that most of the assets owned by someone can be reached by that person's creditor.

Nowadays, people tend to show a great interest in this field, much more than before. Although there have always been protective measures available to protect someone's assets, the latter part of the 20th century prompted more interest in personal asset protection. Thus, it began to develop as a stand-alone area of law in the late 1970s. Statistics show that in 2003 60% of America's millionaires have considered resorting to personal asset protection planning.

So, personal asset protection planning is the process of protecting one's assets from lawsuits, of keeping them beyond the reach of potential creditors. If it takes place before any act has occurred that could result in a claim against you, the planning is considered to be legal and ethical. It does not include hiding or destroying assets, signing false documents or any fraud or perjury. This personal asset protection planning can be achieved in several ways. The first one is divestiture, which refers to the transfer of someone's property to another. This way relies on the fact that one creditor cannot claim something that the debtor does not own.

Another method, exemption planning, refers to the transfer of someone's assets to a statutorily class of property (life insurance, IRA etc). Some factors determine what type of personal asset protection should be used for a given client: the identity and personality of the creditor (how aggressively the creditor will pursue), the nature of the assets (the specific assets owned by the debtor), and the extent to which the debtor is willing to go to protect his assets.

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