According to wikipedia: Asset protection consists of methods available to protect assets from liabilities arising elsewhere. It should not be confused with limiting liability, which concerns the ability to stop or constrain liability to the asset or activity from which it arises. Assets that are shielded from creditors by law are few: common examples include some home equity, certain retirement plans and interests in LLCs and limited partnerships (and even these are not always unreachable). Assets that are almost always unreachable are those to which one does not hold legal title. In many cases it is possible to vest legal title to personal assets in a trust, an agent or a nominee, while retaining all the control of the assets. The goal of asset protection is similar to bankruptcy, and the two practice areas go hand-in-hand. When a debtor has none to few assets, the bankruptcy route is preferable. When the debtor has significant assets, asset protection may be more sensible.[citation needed]
Government laws and its legal system play a part in asset protection. In some venues they may protect too much, while in others, they’re the villain that we should be protected from. This article examines when and where.
Three categories of ‘claimants’ who seek to get what someone else owns are:
* Creditors for payments owed
* Lawsuit Claimants for damage incurred
* Divorce/paternity litigants for what can be got
Each category shows up in a different type of court where different protections are afforded to defendants. Let see what government laws and its legal affiliates offer in each case.
Protection from creditors:
Your creditors are people you willingly contracted with for services or products in return for payment. You received their products and now you say you can’t pay them, because you’re bankrupt.
You file in bankruptcy court – a federal court – to have the judge determine how much you must pay to whom based on the assets you still have. Both state and federal laws protect some of your assets on the basis that you ought not to be left destitute – on the street so to speak. States have homestead laws and insurance laws that protect you too.
But federal law protects your government-regulated retirement accounts – such as your 401(k) or IRA, against creditor’s claims under your bankruptcy. Some people have enormous amounts of money in these accounts.
No one ever goes to jail for being a debtor to creditors. There’s no debtor’s prison, supposedly. That’s a good thing. But some of this protection from creditors is just too much.
Protection from ‘damaged’ claimants:
Legal suits are filed in superior courts for claiming significant reimbursement for damage incurred. Your liability insurance can handle most of these.
But there’s the danger of unfair suits that are based on phony or trumped-up damages. These suits often target people with ‘deep pockets’ as defendants. Claimant lawyers often take these cases on contingency.
Such defendants worry about the court making unfair court findings, an order to pay money way out of proportion to fairness, or just shelling out outrageous court costs to prove their innocence from fault. Many of these defendants settle with the claimants for a smaller amount than demanded just because it’s too costly to prove their innocence. That’s what the claimants – and their lawyers- are really looking for.
These defendants should consider asset strategies to reduce their appearance of having ‘deep pockets’. Many asset transfer techniques can achieve this.
Government’s part in protection is at least in a court system that affords a jury and some due (fair) process. But, sometimes, allowing contingent fee-only complaint lawyers or winning defendants unable to collect their legal fees perhaps fosters many nuisance suits.
Protection voided for a litigant in divorce/paternity suits:
Such suits are filed in a state’s ‘family’ courts. At stake are the fundamental rights – i.e. constitutional rights- of one of the litigants. These include custody loss of a child, loss of most all his assets, and then a continual taking of much of his income for up to 23 years in some states – all against his wishes to remain a parent caring and supporting his child directly.
But what makes this area unique is that there’s no need to find any ‘wrong’ much less a serious one like ‘unfitness’ in order to have such rights taken from him. That, in itself, should signal gross unfairness.
It’s the perversion of laws over the last 60 years along with no-fault divorce, and the almost assured sex-based outcome that the father will lose those rights that, together, has turned this ‘unfair’ taking into a multi-billion dollar a year industry. And, that industry has promulgated the propaganda that supports the ‘unfair’ taking as valid. So, it maintains and grows itself – further destroying the rights of fathers and their children’s rights to them.
The government and its family court system – with the help of all its affiliates and beneficiaries of the plunder of fathers – have created a kidnap and extortion scheme inflicted on fathers in the guise of ‘legality’. A father’s rightful and constitutional demand to parent and support his child directly at least equally to the mother is ignored.
The government has failed its obligation to fathers, to protect them with the constitutional due process that is required when fundamental rights are at stake. No creditor protections are afforded him under child support orders no matter how bankrupt he becomes. Fathers are routinely sent to jail under contempt for not paying what they can’t.
The only asset protection for a potential father – since government’s constitutional protections are denied him – is to be forewarned of the tyranny he’ll face for becoming a father, no matter how decent a man and father he is.
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