Many individuals and companies are faced with frivolous lawsuits merely because they have exposed assets. In many states, the creditor of one joint tenant to a bank account can seize the entire account balance to satisfy a debt. The theory is that since the debtor-joint tenant can take all the proceeds from the account, their creditor has similar rights. The filing of a joint income tax return makes both parties jointly and severally liable for any subsequent tax deficiency. Misrepresentations Basic Protection Concepts Asset protection has a variety of aspects.
Insurance achieves asset protection by sharing risk with other parties and risk management.
However, coverage and availability vary and one must be sure that policies purchased cover the risks that you wish to protect yourself against. Gifts can be made to spouses, family members and charities. Legal entities such as corporations and trusts can be used to hold title to assets or operate a business. Such entities are often stacked or tiered creating a layering effect. In some cases, assets are even transferred outside the United States.