Gabriel Katzner - July 11, 2019 - Asset Protection
Traditional Asset Protection

Asset protection planning is a practice area that’s far from new; even if you’ve never heard the term before, you’ve probably engaged in some form of traditional asset protection planning at some point during your life. In fact, no matter the words you used to describe it, you probably have several forms of asset protection planning in place right now. But if you aren’t aware of all the approaches, and you’re not acting in a measured and deliberate way, your current protection planning efforts may not be strong enough to protect yourself, your family, and your assets.

Asset Protection Planning: What is it?

Asset protection planning means positioning or repositioning assets to protect your property in advance of a legal claim. This term specifically applies to claims that may happen in the future, NOT to existing claims that have already been filed. To be effective (and to avoid accusations of fraud, which can bring legal penalties), asset protection planning should take place long before the hint of a claim, and ideally long before the events occur that might lead to such a claim.

Asset protection planning = proactive planning. Bottom line, if you’re not willing to plan proactively, then the rest of this article will be of little use to you.

When you put your plan in place, your goals are clear: to provide an incentive for settling a claim, to improve your bargaining position, to offer options when a claim is asserted, and ultimately, to deter litigation from occurring in the first place.

What Is Traditional Asset Protection Planning, and Why Does It Often Fail?

The most common form of traditional asset protection planning is liability insurance, which can include automobile, homeowner’s, umbrella, officers’ and directors’, malpractice, and similar policies. You probably have at least one of these policies currently in place.

Unfortunately, liability insurance isn’t perfect, and it may actually encourage a lawsuit since it can be perceived as “easy money.” Liability insurance also sometimes fails because a given policy provides inadequate coverage, some policies come with exclusions, and sometimes carriers become insolvent.

Traditional asset protection planning may also involve the use of a business entity, like a corporation / LLC, which can segregate business assets and liabilities from personal assets and liabilities. But while a corporation may shelter personal assets if the lawsuit is filed against the corporation, this solution is not airtight. If you, as the shareholder of a corporation, are personally sued, your shares of stock in the corporation are not protected from a judgment entered against you. Also, bear in mind that if your corporation fails to observe certain formalities, then the “corporate veil” may be pierced, and your personal assets will become vulnerable to a judgment entered against the corporation.

A third traditional asset protection plan can be established under the laws of certain states. This plan allows state residents to exempt specific assets from the claims of creditors. This may include protection for property owned jointly by spouses (“tenancy by the entirety” ownership), a primary residence (“protected homestead”), the cash value of life insurance, investments held in a retirement account, and annuities. But again, this plan isn’t perfect; these state exemptions are often subject to limitations, such as a cap placed on the value or land area of the protected homestead.

Traditional Asset Protection Planning Has Flaws: So, What’s Next?

Advanced estate planning isn’t just for the wealthy (whatever that may mean). Anyone who has accumulated any amount of wealth can be sued for almost any imaginable reason. To protect yourself and your family, talk to our estate planning experts and adopt more advanced planning tools that may better meet your needs (such as a Hybrid Domestic Asset Protection Trust). You may experience stronger protection from, for example, an irrevocable trust (such as a Hybrid Domestic Asset Protection Trust) or a more sophisticated business structure.

Our team can help you move beyond traditional asset protection by creating a comprehensive plan that will fit your unique family situation and financial status. Call today to arrange a consultation.

You can schedule a call with us or reach us directly at 855.528.9637 to learn more about how best to plan today to protect those most important to you.

Gabriel Katzner

In 2002, Gabriel Katzner, the founding partner of Katzner Law Group received his Juris Doctorate with honors from the Fordham University School of Law. After spending the first 7 years of his legal career
practicing at Cahill Gordon & Reindel LLP, an international law firm based in New York, he went on to found his own firm.

Gabriel Katzner has a track record, along with a vast number of
outstanding public reviews across platforms, of working hard on behalf of individuals who need assistance with comprehensive
estate planning services. Finding a lawyer who is knowledgeable about revocable and irrevocable trust planning, guardianship for minor children, asset protection, trust administration and probate,
as well as Medi-Cal / Medicaid planning is extremely important.

Years of experience: More than 17 years
Location: San Diego, CA


This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. Furthermore, it has received approval from attorney Gabriel Katzner, an experienced estate planning lawyer with over 17 years of legal expertise.

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