Many business owners fail to consider asset protection planning until the fear of a potential claim against them springs up. Unfortunately for these business owners, asset planning is sometimes insufficient if a claim has already arisen. A recent article in Forbes cautions readers to not only consider asset planning early, but also to recognize when it is simply too late.
If you attempt to engage in asset protection after a claim has already arisen against you, you may be accused of making a fraudulent conveyance. As asset protection attorney Jay Adkisson has explained:
By the time that a person has signed a personal guarantee that pledges all their assets for some loan, or they have a serious accident, or they incur some other significant liability that threatens to wipe out their wealth, the time for asset protection has passed.
When considering whether asset protection is right for you, it is important to take the offsetting costs of various asset protection plans into account. For example, some asset protection strategies require you to change the ownership of particular assets or pay an income or gift tax. Moreover, the tactics you employ may reduce access to the underlying assets.