If you are a physician you are aware of horror stories about colleagues who lost everything after being held liable for medical malpractice in amounts far beyond their malpractice insurance. Asset protection planning enables you to employ legal techniques to prevent anyone from taking your assets. However, there are limitations as to what you can and cannot do. Your degree of exposure to risk of liability, the type of assets you own, and your total net worth are essential factors to consider when you and your lawyer develop a strategy for asset protection. Statistics can help you decide your risk factor, and help you to assess what kind of asset protection you need.
Insurance is the most common asset protection technique.
Many of the traditional forms of estate planning can be used effectively as asset protection techniques. Gifts of property not intended to defraud creditors remove the assets from your estate. If your child owns the farm, it is no longer at risk from your creditors - although your son's creditors and his spouse may pose a risk. Retirement plans have a considerable amount of asset protection built in due to federal and state law. Spendthrift provisions in life insurance contracts and certain trusts can prevent creditor attack while the assets are outside the hands of the beneficiary.