So if you want to adopt a proactive approach in asset protection planning, you need to give the planning an early start, keep it streamlined and most importantly abstain from hiding any information from the creditors. So before going in to discussing the rules that govern the strategic planning of asset protection, let us first make the concept of asset planning clear in our minds.
What is asset planning?
The concept of asset protection entails that an owner of an asset need to devise certain tactics and strategies that would help them safeguard their assets. Or we can say that asset protection is one of the forms of financial planning that help to secure an individual’s assets from the claims of the creditors. The technique of asset protection and planning is used by businesses and individuals so that they can restrict the influence of creditors on certain valuable assets while at the same time adhering to the boundaries of the creditor-debtor laws.
How does asset protection technique works?
Under the asset protection technique the assets are managed and shielded in a legitimate sense. It means that there is no inclusion of illegal practices from the side of asset owner such as concealment and hiding of assets, fake transfer, evading of taxes, contempt and bankruptcy fraud. Accountant advice that the asset protection strategies should be planned before the creditors file the claim. It is because, it will be useless to indulge in asset protection techniques after the claim is file by the creditors.
Rules that govern the planning process of asset protection
People say that an essential rule of gambling is that in order to win, you need to withdraw from the table so that your prospective losses stays barely noticeable. The same situation can be applied when you are planning an effective asset protection technique. It is advisable that in fruitful times you take the chips off the table so that even times turn unpleasant, you can withdraw or walkaways from the winning table. It is because you have substantial protected assets for you to depend on.
So if on one hand, the creditors are primarily concerned about devising such strategies that would help them to collect the assets from the debtor’s side through their claims, the debtors are focused on asset protection planning strategies so that they can circumvent the alarming claims from the creditors.
Therefore, the debtors should keep in mind that all the way during the asset protection planning, their concerns should not only be focused on asset protection. They need to also ensure that they are protecting their assets through legal means so that they do not end up in series of law suits and confinement for using fraudulence and contempt throughout the protection process.
So, here are certain rules that every debtor has to take in to considerable while securing their assets in good times:
Exercise a proactive approach
An important aspect of asset protection is timing. There is no use of an effective and tactful asset protection planning if the water flows off their heads. If you succeed in protecting your assets before the creditors file for the claim, there is high chances of the fact that you will protect them under legal means. It is because, if you try to protect the assets after the claim has been filed then the chances are high that you might indulge in fraudulent practices that are the only shortcuts available at that time. In this way, you end up inviting mess in your court and legal actions against yourself.
Differentiate between the personal and business assets
Make this thing the rule of your thumb that business assets are entitled for large corporations and LLCs that are used for large scale commercial purposes and are definitely not your personal moneyboxes. By contrast the personal assets have their place in the trusts. Therefore, before going in to devising an effective asset protection strategy, it is advisable that you learn the difference between the types of assets first.
Do not exercise too much control and authority on asset protection
Too much of anything is bad and leads to undesirable outcomes. The same case goes to exercising too much control on asset protection. In this respect, the planning for asset protection aims to create an equilibrium in the domain of giving the clients adequate power so that the assets do not withdraw.
Keep in mind that if you are engaging in such asset protection plans that involve the elements of secrecy, then be ready to face a plethora of difficulties. And for the most part, you cannot think of going in to bankruptcy before disclosing the full information about your transfers and assets.
