Asset Protection 101: First in an Occasional Series

Begin your asset protection planning early.  That is probably the most fundamental rule with such planning.  You must begin and implement any asset protection planning before a judgment, lawsuit, legal claim, divorce or other threat arises.  Starting after any one of these storm clouds forms is too late;  asset protection planning can do nothing for you.  In fact, planning at that late date can get both you and your advisors in some hot water.  You and whoever assisted you with the planning could wind up liable for a creditor’s attorneys fees and you could find yourself unable to receive a discharge in a bankruptcy proceeding.

If you make a transfer of assets after a claim arises, it could be undone by the court due to our laws prohibiting fraudulent transfers.  In Washington, even if you are planning before a claim arises, your transfer could still be fraudulent if it was made with intent to hinder, delay or defraud a creditor, or if you receive less than reasonably adequate value in exchange for the asset(s) and the transfer leaves you insolvent or with an unreasonably small amount of capital to engage in certain desired transactions, the transfer(s) may be fraudulent.  This means the transferred assets may not be protected from creditors and could be possibly be undone by a state, federal or bankruptcy court.

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