Recent Blog Posts

How costly is a good asset protection plan?

The Presser Law Firm, P.A. — Mon, 14 May 2012 18:48:00 GMT

Protecting your assets is not too costly. And it probably won’t take more than several hours of your time. The average family can usually gain good protection for a few thousand dollars, sometimes less. We frequently shelter large fortunes for less than a fraction of what their investment advisor charges each year, and many protective steps cost absolutely nothing. But you have to see it in perspective. A doctor and prospective client once complained to us that he did not have the spare cash to set up the few entities he needed to safeguard his $3 million net worth. He thought the proposed $15,000 fee was too costly. However, this doctor spends $65,000 a year for malpractice insurance. This $65,000 policy covers only malpractice claims – and only up to one million dollars per claim. Next year the doctor will pay another $65,000 (assuming his premiums don’t increase) for the same limited protection. In comparison, we offered this physician complete protection against any lawsuit, in any amount, for the rest of his life, all for less than one-fourth the cost of what he pays each year for malpractice insurance. So which is the better deal – insurance or asset protection? Don’t think of asset protection as an expense. It’s an investment – and a great investment – if you want financial security!

How can asset protection improve your other financial objectives?

The Presser Law Firm, P.A. — Mon, 07 May 2012 17:55:00 GMT

Asset protection is only one financial goal. You must coordinate it with your estate planning, as well as your tax, investment and other financial goals. You want to create a comprehensive, integrated financial plan. For example, we integrate our client’s asset protection with their estate plan. People who need asset protection often have no estate plan – not even a simple will. Their need for asset protection oftentimes prompts estate planning. And we can oftentimes accomplish creative results when we combine asset protection with estate planning.

Asset protection plans might also offer legitimate tax benefits. For example, we may use the limited partnership to lawsuit-proof your assets but the limited partnership may also save you significant estate taxes. Of course, you want to avoid promoters who ‘sell’ asset protection through illegal tax schemes (pure trusts, etc.). And your planner should inform you about the tax and other financial consequences of any proposed plan.

For an integrated, complex plan, you should involve your financial and estate planning professionals. They’re essential members of the team. We encourage this team approach to our clients’ planning – particularly those who have considerable assets or complex estates. Our clients are quite satisfied when we plan their finances together with their other advisors. They then feel that their several financial concerns have been fully addressed and coordinated.

If I have a good asset protection plan, can I forego liability insurance?

The Presser Law Firm, P.A. — Mon, 30 Apr 2012 19:14:00 GMT

We emphasize that we seldom suggest asset protection as a complete substitute for liability insurance. Nevertheless, certain high-risk professionals and businesses find their insurance costs prohibitive. Or liability insurance may not be available. Our asset protection plan then complements a low liability policy or substitutes for insurance. The problem with insurance is not only its cost, but that it also attracts litigants. Nevertheless, liability insurance is invaluable for most risk management programs. Cost-effective insurance should be your primary defensive barrier. But be sure to supplement it with an asset protection plan. A lawsuit defendant’s strategy then is to settle a case within the policy limits and have the plaintiff forego further claim against the defendant’s personal assets. You can achieve this only when your assets are well-protected.

A number of our clients – particularly physicians and manufacturers – ‘go bare’ or without insurance. Their insurance costs are simply too expensive. We then make certain they have the strongest defensive plan. Even in these cases we recommend a legal defense policy to cover their defense costs if they are sued. So in many instances, our asset protection plan can save a client tens – or hundreds of thousands – a year in insurance costs.

How does asset protection discourage lawsuits?

The Presser Law Firm, P.A. — Mon, 23 Apr 2012 17:25:00 GMT

The most effective way to discourage litigation is to convince a potential plaintiff that you have no exposed wealth that they can seize even if they sue and win their case. By discouraging litigation you avoid the time, hassle and expense of defending against the lawsuit. Isn’t it better to discourage a lawsuit than to be forced to defend against the lawsuit and spend huge legal fees, time, and effort to ‘win’? If you prevent even one potential lawsuit, you pay for your asset protection plan many times over.

Litigation is economics. A plaintiff’s lawyer evaluates the case against you and weighs the cost of suing against the odds of winning. The lawyer then factors in the likely recovery based on your exposed assets. Essentially, the lawyer decides are you worth suing? Few sensible plaintiffs sue when they cannot foresee recovering enough to make the lawsuit worthwhile. Of course, you may nevertheless get sued because even a shaky lawsuit has some ‘settlement value.’ Most people will pay something to make their lawsuits disappear. This legal ‘extortion’ is one reason people dislike lawyers and litigants; nevertheless, it’s reality. It’s ‘part of the game.’ People also sue ‘vindictively’. They have a score to settle. There are other reasons why even those well-protected get sued. You may be a peripheral defendant in a lawsuit. Your assets aren’t investigated because you’re one of many defendants. But as a rule, it’s not whether you have assets that determine whether you get sued; it’s whether you have exposed assets. To avoid lawsuits, you must convince a prospective plaintiff that you have that impregnable financial fortress and they have nothing much to gain from suing.

Whenever one of our clients is threatened with litigation we try to ‘sell’ the adversary on the fact that our client is well-protected. We don’t use an ‘in-your face’ approach, but we do quickly let the adversary know that even if he sues and wins, he has little chance of collecting. Why spend years in court only to end up empty handed? It usually works. Most legal threats then vanish or are quickly and inexpensively resolved. Lawsuit avoidance is a major part of our practice.

I imagine that a major lawsuit can cause quite a bit of stress. How do most of your clients react to litigation?

The Presser Law Firm, P.A. — Mon, 16 Apr 2012 16:38:00 GMT

Who can be happy about being a defendant in a major lawsuit? It can be emotionally devastating. They can spend years and hundreds of thousands of dollars – or even millions – to defend the case. We have seen our share of nervous breakdowns, divorces, health problems and personal bankruptcies triggered by litigation. And how our client responds to the stresses of litigation can influence the outcome of their case even more than their asset protection plan. We have had many clients settle their cases for more than was necessary only because they could no longer endure the emotional strain from the lawsuit. Their own emotional fragility was the weak link in their protective armor. But we well-understand this and we spend a fair amount of our time responding to our clients’ stresses. Ultimately, the client’s ability to withstand the strain of conflict determines how far we may go with a case.

Aside from not losing your assets to lawsuits are there other benefits of asset protection planning?

The Presser Law Firm, P.A. — Mon, 09 Apr 2012 20:32:00 GMT

That’s another important question. When you protect your assets, you gain four big benefits. First, it will discourage lawsuits and help you to more favorably settle any pending lawsuits. Second, it can lower or eliminate your insurance costs. Third, it improves your overall financial planning, and finally, and most importantly, it prevents the loss of your assets if a claim is made against you. Those are indeed four powerful benefits. But the biggest benefit is that you get peace of mind. You sleep nights. You worry less about losing your wealth. That’s what our clients want!

Given that asset protection is legal - what about the ethics or morality of preventing creditors from getting paid?

The Presser Law Firm, P.A. — Mon, 02 Apr 2012 20:20:00 GMT

The moral or ethical issues are another question. Some people believe it’s unethical or improper to shelter their assets from those who have a rightful claim. But these folks might then think about asset protection as financial self-defense to discourage frivolous and harassing lawsuits and to make them a less likely lawsuit target. They’ll live life more confident about their financial security. Of course, one can always pay or favorably settle those claims they feel morally obliged to pay, and our clients oftentimes do – to assuage their conscience. And that’s their prerogative. But if they’re unprotected, they have no choice. They can be wrongfully stripped of their wealth. That’s what we want to prevent.

We can better make the case that those who don’t safeguard their families’ security are negligent, and in breach of their own self-obligation. Likewise are their lawyers who defend them on a serious case and never suggest that they fortify their assets in the event they lose their lawsuit. Yet few defense lawyers offer such common sense advice. It’s sad. Inevitably their clients pay the price for their lack of common sense.

We can also look at the ethics of asset protection from another perspective. Is it unethical to file bankruptcy to eliminate debt? Is it unethical to use corporations or limited liability companies to limit your personal exposure from business debts? Is it unethical to keep your home or retirement accounts that may be exempt from creditor seizure? Most people would think not because the law makes it permissible. Asset protection planners only take advantage of the statutory and case law that in one way or another shields assets. But ultimately, whether or not to pay a claim must be left to the client’s conscience.

Is it legal to shield assets against lawsuits and creditors?

The Presser Law Firm, P.A. — Mon, 26 Mar 2012 20:43:00 GMT

It’s not only legal but essential! What thinking person could today question the legality of asset protection planning? And who could question its necessity? Yes, there can be that troublesome grey area that separates legal from illegal asset protection planning. And you can’t cross the line. For example, a legal plan won’t involve secrecy, concealing assets, perjury, tax fraud, money laundering or bankruptcy fraud. That’s not what asset protection is about. You want legal protection. A questionable ‘protective’ strategy can only get you into bigger trouble. If you question the legitimacy of a proposed plan, talk to another planner. There are many perfectly legitimate ways to shield your wealth without engaging in dubious or downright illegal practices. If you incorrectly assume that asset protection involves secrecy, tax evasion, concealing assets or other questionable practices, then you are wrong. We discuss only 100 percent legal techniques.

The legitimacy of asset protection planning is best evidenced by the many trade and scholastic books now available on the topic. Many journals and articles openly discuss – and recommend – asset protection. The American Bar Association has formed an asset protection subcommittee. Those who equate asset protection with sleazy practices simply don’t understand the field.

We might explain the legitimacy of asset protection as the intelligent application of the many statutory and common law tools – exemption laws, co-ownerships, corporations, LLCs, trusts, bankruptcy and so forth – to best shield one’s wealth. We didn’t create these tools. We only show our clients how to use them to their advantage.

If I have liability insurance, do I still need an asset protection plan?

The Presser Law Firm, P.A. — Mon, 19 Mar 2012 16:24:00 GMT

That’s an excellent question. Let’s put it in perspective. Liability insurance is important, but liability insurance can’t replace the other ways to protect yourself. Liability insurance insures only one in three lawsuits. So most lawsuits aren’t covered. For example, you may be sued for breach of contract, a defaulted loan, or family dispute. The possibilities of an uninsured claim are endless. Nor does insurance fully cover every claim. How good is your million-dollar liability policy if you’re sued for two million? And with today’s unpredictable, ludicrous jury awards, who can be certain they won’t be hit with an excessive judgment? Nor can you overlook those countless policy exclusions and loopholes. You can’t even be certain that your insurance company will be in business when you’re hit with a claim? Insurance companies – like other companies – do go bankrupt. We strongly recommend buying liability insurance. It’s a smart first step for protection and risk management. Also buy as much liability insurance as you can reasonably afford. But make liability insurance only your starting point. It can’t replace a solid asset protection plan that will fully protect you against every size and type claim.

Do most lawsuits involve small amounts of money or are they wealth threatening?

The Presser Law Firm, P.A. — Mon, 12 Mar 2012 14:08:00 GMT

If a credit card company sues you for $6000 you only have $6000 at risk. But even when you can endure the odds of being sued and the uncertainty of winning or losing, you must consider the possibility of a devastating award. You can’t predict what you could lose in a major lawsuit. A plaintiff who wins a few dollars in actual damages may pocket millions more in punitive damages. A buyer of a $20 defective product can turn it into a class action case that can cost the seller millions – or billions. One lawsuit can start an avalanche of others. Enough nonsense lawsuits topple the most powerful business or wealthiest family, as we have seen with litigation against tobacco, pharmaceuticals, asbestos and other industries.

This uncertainty of outcome also explains why nine out of ten lawsuits settle. What defendant can go to trial confident of victory? What defendant can know what they may lose if their case goes to trial? How many defendants can afford the exorbitant legal fees to answer these questions? So plaintiffs’ lawyers use lawsuits as their weapons to extort whopping settlements because the economics are always with the plaintiffs. The defendant is coerced to pay ‘go away’ money, because the defendant who has exposed wealth simply has too much to lose by gambling on litigation.

Of course, lawsuits can involve more than money. A lawsuit can attack your personal character – particularly those that allege fraud, racketeering, or conspiracy. And you may have good cause to get angry when a lawsuit attacks your professional competency. Ask any doctor how it feels to be characterized in a malpractice lawsuit as ‘negligent, incompetent or reckless.’

One leading New York thoracic surgeon was sued twice in his thirty-year career but will tell you, “You know you did nothing wrong, but you begin to question your own competence. Inevitably your self-confidence and self-esteem drops a few notches.”

Every lawsuit creates some stress and uneasiness; however, a major lawsuit can disrupt your social relationships, cloud your thoughts, dampen your enthusiasm for the future, and always create that nagging sense of insecurity. The essence of the lawsuit was best voiced by the Tort Informer: “The law provides incredible financial incentives to seek out a victim with deep pockets, drag him into court, ruin his reputation, wear him down with endless discovery demands, pay a fortune to defend himself and then extort a settlement. This is not justice in any sense of the word.” But if you are well-protected you may avoid all this. That’s our goal with our clients.

But isn't asset protection less important for people in safe occupations?

The Presser Law Firm, P.A. — Mon, 05 Mar 2012 21:41:00 GMT

You would think so, but that’s not necessarily true. The unfortunate reality is that no matter how safe and secure we think we are, we are each exposed to liability and financial hazards, regardless of our lifestyle, occupation, or how carefully we live our lives. You can minimize the dangers but you can’t entirely avoid them. In our litigious society there are too many opportunities to encounter trouble. What financial trouble awaits you next month, or next year? Who knows when they might get hit with a costly accident or negligence claim, a lawsuit for breach of contract or professional malpractice, creditor claims from a failed business or divorce? You see the point. The potential liabilities are limitless. But until trouble strikes, you don’t realize your vulnerability. And until you recognize your vulnerability, you may take your financial stability for granted. That’s unfortunate. And dangerous! You must think defensively. People shouldn’t ask if they will someday face financial danger. They should ask when and how will it happen! Since they can’t predict the answer, their only logical option is to build the strongest protective fortress possible for their wealth before trouble strikes.

We sometimes learn that lesson too late. One of our clients claimed she would never be sued because she was a schoolteacher. True, she wasn’t sued for her teaching, but a year later she was sued for over a million dollars for the negligent handling of her mother’s estate. Obviously, a lawsuit need not relate to your employment. No matter how cautious and careful you are you still can get sued. For instance, anyone who drives could get into an accident. We are all at risk. It is not only doctors, real estate developers, or business owners who attract lawsuits. Everyone is a potential target!

Everybody seemingly wants a piece of the action and a chance to win the legal lottery. Kids sue parents, partners sue partners, patients sue doctors, customers sue manufacturers, students sue teachers, and parishioners sue their clergy. From toddlers to executors of the deceased, anyone can sue and nobody is immune – not even the President of the United States.

Perhaps more frightening than the blizzard of lawsuits is the number of ridiculous cases that squeeze their way through the court system and reach a jury. It seems that the more ridiculous the case, the greater the plaintiff’s victory. Scan the newspapers and magazines. Watch TV. Laugh to the Saturday night stand-up comics. Who can most scintillate us with the day’s craziest lawsuit? Why has litigation become our favorite form of entertainment?

Think for a moment, though: Are these cases really humorous when you consider the great waste of time, money, and energy that was expended to defend against them? Are these frivolous and bizarre cases truly funny when you consider the aggravation, worry, and grief that so many defendants were forced to endure before they could shake themself free of these nutty litigants and their stupid lawsuits? Some of these whacky plaintiffs actually won their cases, which bolsters our argument that our legal system is only a legal lottery where even the bad case has a good chance.

You might argue that these cases are anomalies and rare curiosities within our legal system, but you would be wrong. Hundreds or thousands of equally ridiculous cases are now pending in your local courthouse. We know. We see enough ludicrous cases in our own practice. Take a few minutes to read the weekly Bar journals for equally far-fetched cases breaking new legal ground. There’s always a picture of another grinning, victorious plaintiff’s lawyer who bagged another defendant on some spurious grounds.

As we say, you do not have to do anything wrong to be sued and lose. You only have to be in the wrong place at the wrong time or somehow come across some greedy lunatic who thinks he or she has reason to be grieved. Voilà! Your wealth could soon be in their pocket!

Isn't Asset Protection only for the Wealthy?

The Presser Law Firm, P.A. — Mon, 27 Feb 2012 14:42:00 GMT

That's a fallacy. It's true that America's wealthiest families were traditionally 'the deep pocket' defendants who were most concerned about shielding their wealth. The social elites of past eras sheltered their massive wealth with trusts, family corporations and other protective entities to privatize or lawsuit-proof their property; however, they seldom referred to their financial strategies as 'Asset Protection'. But the super-rich are no longer the only lawsuit targets. Virtually every American with any assets now needs protection. So Asset Protection isn't only for the affluent. In fact, most of our clients have only modest wealth. However, their modest wealth is precious to them! That's what counts. How would you feel if you lost your assets; your home, car, savings? Wealth is relative. It is not only the rich and affluent who need protection. Anyone with any assets needs protection! Here's an example. An airport shoe-shiner was sued for $100,000 on a bank loan he guaranteed for his son. He owned only his Bronx home with a $100,000 equity. Many people don't consider $100,000 serious wealth. They would hate to lose it, but this loss wouldn't hurt their lifestyle. That's not how our shoe-shine client saw it. His $100,000 home equity was his entire life savings. How many more shoes must he shine to replace his $100,000? He will have a harder time recouping his $100,000 than a millionaire would his millions. That's why we take every case serious.

Are all lawyers bad?

The Presser Law Firm, P.A. — Mon, 20 Feb 2012 17:16:00 GMT

With so many lawyers around, it is inevitable that there are so many lawsuits. The thought of nearly a million lawyers running around searching for their next victim endangers anyone with significant assets. You can’t blame every lawyer, though. Not every lawyer is in the lawsuit business. And if you look hard you can still find plaintiffs’ lawyers who won’t file a frivolous lawsuit. They use their good judgment and do not abuse the judicial system. We are proud to be part of the legal profession with these lawyers as our colleagues. But how many lawyers do throw lawsuits around like confetti? How many lawyers see the lawsuit as a way to make a fast buck? How many lawyers don’t care if their lawsuit is meritless as long as they can extort enough money from some hapless defendant to make the lawsuit worthwhile? Too many!

Apparently, the tide has turned. The American Bar Association Journal (the largest US publication for lawyers) in its article Protect Your Assets Before A Lawsuit Arises counsels their 400,000 members that asset protection is as critical for them as to their clients. One trial lawyer interviewed for the article frankly admits, “I don’t want people doing to me what I do to other people all day in court.” So, in a sense, by defending the wealth of prospective lawsuit targets we believe we are helping to counteract a bad system that favors bad lawsuits.

How bad is the litigation problem in America?

The Presser Law Firm, P.A. — Mon, 13 Feb 2012 19:56:00 GMT

It has reached epidemic proportion. About 50 million lawsuits are filed every year. Statistically, each American will be sued five times over their lifetime. And this doesn’t include all the other potential threats – divorce, etc. Today, the challenge is not making money – it’s keeping it!

Why is America so lawsuit crazy? Sociologists, economists, politicians, and lawyers each have their own theories. Our perception is that we have too many lawyers, too many laws, and too few judges with the courage or common sense to summarily throw out the blatantly frivolous lawsuits. We also have too many juries that don’t rule on the basis of liability. Their goal is to empty a defendant’s ‘deep pockets’ and redistribute the wealth.

There are also too many incentives to sue. For example, a punitive damage claim can enrich a plaintiff who has little or no actual damage with a multi-million-dollar windfall. Nor are there many reasons not to sue. It won’t cost a plaintiff a dime in legal fees because most lawyers work for a contingent fee.

There is much wrong with our legal system, but it is not only the system’s fault, as perverse as it is. The fault is chiefly that as a society we have become a nation of victims. When things go wrong – as they invariably do – we instinctively point blame elsewhere. The lawsuit is the natural consequence of this distorted national mindset.

Walter K. Olson’s The Litigation Explosion explains our litigation dilemma from a different perspective:

“The unleashing of litigation in its full fury has done cruel, grave harm and little lasting good. It has helped sunder some of the most sensitive and profound relationships of human life: Between the parents who have nurtured a child; between the healing professions and those whose life and well-being are entrusted to their care. It clogs and jams the gears of commerce, sowing friction and distrust between the productive enterprises on which material progress depends and on all who buy their products, work at their plants and offices or join in their undertakings. It seizes on former love and intimacy as raw materials to be transmuted into hatred and estrangement. It exploits the bereavement that some day awaits the survivors of us all and turns it to an unending source of poisonous recrimination. It torments the provably innocent and rewards the palpably irresponsible. It devours hard-won savings and worsens every animosity of adverse society. It is the special American burden, the one feature hardly anyone admires of a society that is otherwise envied the world around.”

Amen!

What is 'Asset Protection'?

The Presser Law Firm, P.A. — Mon, 06 Feb 2012 18:44:00 GMT

Asset protection is simply adopting a range of strategies to title your home, savings, real property, business and other assets in a manner that legally shields them against lawsuits and other claims. The goal to protect one’s assets from litigants and creditors might seem apparent, yet there is more to it. Asset protection – or lawsuit proofing, as some call it - creates a safety net. It won’t guarantee that you’ll avoid lawsuits or other financial calamities, but it can guarantee you’ll lose fewer assets if you do run into trouble. Unless your assets are protected, you’re in ‘free-fall.’ You’re vulnerable and exposed. You can’t afford that exposure. Not with the many risks you’ll encounter.

Of course, there are other threats to one’s wealth. Inflation, recession, stock market downturns, the devaluation of the dollar and other economic risks – can also eradicate one’s wealth. But we leave the solutions to those problems to financial planners and other professionals. Ours is a different niche. Our job is to protect our clients’ wealth against direct predatory attack.