Several recent cases regarding poorly designed and implemented asset protection plans have led some practitioners to question whether asset protection planning really works. In most situations, a properly structured asset protection plan that integrates asset protection planning with an IEP results in a better outcome than without. This result depends, however, upon several variables. Definition of Asset Protection Planning Technically, asset protection planning is the process of organizing one's assets and affairs in advance to guard against risks to which the assets would otherwise be subject. One who is planning to protect assets must be cautious and avoid the negative implications that may follow if there are creditors who are entitled to remedies under applicable fraudulent transfer and similar laws.
Asset protection is more in the forefront of planning because of expanding theories of liability.
New liability theories are sometimes coupled with results-oriented judges and juries who decide things based more upon a perceived desired outcome than upon the law. An ever-present concern includes some of the high dollar amounts of jury awards that we hear about today. Asset protection must be addressed in the new legal arena because of concerns with the adequacy of traditional forms of protection. Although there are arguments for and against the contingency fee system, it is undeniable that our current legal system, coupled with contingency fees, has helped contribute to the litigation explosion. Goals of Asset Protection Planning The goals of the asset protection component of IEP are varied but all must be addressed to create a high-quality plan.