microphone

I had just finished giving a presentation  on asset protection strategies and recent developments in insolvency law at a national convention.  I was packing up my presentation notes and answering a few questions for attendees, when a well respected asset planner approached me with a pen in one hand and a notepad in the other.   He had taken down copious notes about various asset protection techniques that I had discussed.

He had been particularly curious about the possibility of using a family corporation or  a trust as an estate planning tool.  He explained that he was very interested in the subject because he had a wealthy client who had just been sued and he was concerned that the law suit could “wipe his client out.”

He clearly had missed the start of my presentation:   I smiled and asked “When did you come into this presentation?”  We both knew that was not his fault –  I was  one of several speakers offering presentations that morning  and the organizers and I  had underestimated how popular my topic would be.

I then shared with him the  slide that he missed. The one that reads:

“BY THE TIME YOU  KNOW  OF  A GOOD REASON FOR

ASSET PROTECTION

IT IS TOO LATE”

I then explained the problem to him:   If a person transfers assets  as part of  valid estate planning or business planning, while they are solvent and without knowledge of a claim, that transfer can be protected (subject to certain limitations).  But the same transfer of the same assets for the same consideration when a person is insolvent or knows about a claim against them  will be avoidable as a fraudulent transfer.

Further, an attorney who assists in a fraudulent transfer may subject themself to liability for assisting in the transaction.

Which is why I always recommend asset protection planning BEFORE clients  think it will help them.

 

 

Asset Protection Rule #1 – It’s Too Late Once You Know You Need It