It is all a matter of timing.
It is legal to take steps to protect your assets. It is not legal to take steps to defraud your creditors.
Simply put, plan ahead. If you are going to be proactive about protecting your assets, then do it before you are in imminent danger of losing them.
Here are some of the warning signs that it may be too late:
- You have been named as the party to a lawsuit.
- You have ever filed for bankruptcy.
- A company with whom you are closely connected has ever filed for bankruptcy.
- You are undergoing an audit by a tax authority.
- You are not current on your federal, state and local tax reporting and payments.
- A legal action is being threatened against you.
- You have the borrower or a guarantor on a loan (this is a factor that must be analyzed for your true exposure).
- You have ever been convicted of a crime (the type of crime is important).
- A company with whom you are closely connected has been convicted of a crime.
- You are under investigation by the government.
- The assets you want to transfer are proceeds from an illegal activity.
- If you proceed with the transfer of assets, you will no longer be solvent.
Assuming you can legally take steps now, there are several common ways to protect assets. Popular strategies are to use a Limited Liability Company, an Irrevocable Trust, a gifting program, or a combination of the three.
If you would like to do some asset protection planning, give us a call. We can help.