Risk Management

    What is asset risk management?
    Asset protection is planning with the goal of protecting debtor’s assets from potential creditors.  The basic concept of protection is to change the legal ownership of debtor’s assets while allowing the debtor to keep control of the assets and reap the benefits of ownership.  Asset protection planning does not hide assets or keep them secret from creditors.  Instead, it creates expensive barriers from free access of creditors to debtor’s assets.

    Categories of Asset Risk Planning:

    1. Strategies that utilize laws that were specifically intended to protect the assets of a debtor.
    2. Strategies that use laws that were not specifically designed to protect debtor’s assets.

    Should I have Asset Risk Planning?
    One of the most menacing dangers to your assets is a lawsuit.  Certain people with high risk professions or lifestyles may be in greater danger of lawsuits, like doctors.  However, if you own any kind of property, you may want to protect it against lawsuits.  One alternative to asset protection planning is to buy a high amount of insurance to cover potential problems.   For instance, homeowners insurance will cover up to a certain amount of damages, but if someone is hurt on your property and the damages are higher than the insurance, you may be liable for the difference.  Or if you are in a collision, and your car insurance is not enough to cover the other driver’s damages, you may be liable.

    When should I begin planning my asset protection?
    As soon as possible.  California is a litigious state; that is, people often sue each other in California.  Your unprotected assets are vulnerable to eager plaintiffs who may choose to sue you because of your available assets.  A sound asset protection plan will provide a level of protection from eager plaintiffs.