Debt Free

I read a statistic today that, although I cannot verify, I’m inclined to believe. The United States has roughly 7% of the world’s population, but over 90% of the world’s attorneys. Think about that one for a second. What are they all doing and why do we need them? Who really knows, although I’m sure that stat is out there somewhere as well? My brother once worked for a firm in one of the tallest office buildings on the west coast (loaded with law firms) and said at the time there were more attorneys in that one building than in the entire country of Japan. 

What it does mean is that our society is so litigious someone should sue us just for being stupid. Many of these lawsuits should probably be thrown out before they are ever allowed to proceed. That’s not to say that there are many legitimate needs for lawyers. We do live in a very complex society after all. Not all lawyers are the stereotypical shyster either. Many are great people. Mine’s a fantastic person, in addition to being voted one of the best attorneys in the state by his peers. He’s seen a great many things in his life and has given me fantastic advice on many things outside of the law.

Why the hell am I even bringing up the whole thing? It all points to the need for asset protection. This is especially true if you are a physician or own a business. If you’re a landlord, you really need a solid asset protection plan. Make sure you find an attorney that specializes in such matters. The last thing you need is to work your fingers to the bone for years, building your business or real estate portfolio, only to have it taken away in the blink of an eye. In many cases your business structure will preclude you from losing your business, although your personal assets will still be at risk. Even if you manage to retain most of them, a substantial portion could be eaten up by large legal defense costs. You should protect yourself. The larger your asset base, the greater your need to protect it.

One of the most common asset protection strategies is the use of a trust. Placing your assets in a trust will basically take the ownership away from you and give them to another legal entity. Once they are no longer yours it’s much more difficult for them to be taken away. One caveat here; if you wait until you’re think you are about to be sued, it’s probably too late. You’ll probably run afoul of fraudulent conveyance laws.

Something else to be aware of are scam artists that exist here, as it seems they do everywhere. Some things to take under advisement –

* In most cases you must lose a judgment in order to lose your assets. Of course the IRS knows no such restrictions.

* Most U.S. judgments are not recognized overseas.

* If someone tells you you’ll get huge tax benefits from asset protection plans, look out. While possible, in most cases this substantial tax benefits are unlikely.

* There are some asset protection consultants that aren’t licensed attorneys. Be aware that in many cases they don’t have the expertise required for this type of work. In addition, because they aren’t lawyers, there’s no attorney / client privilege, and thus no confidentiality under the law.