Given the significant number of persons I meet with who are seeking asset protection advice, I have the unique advantage of being exposed to a variety of situations and developing unique strategies to deal with them. I also have the opportunity to negotiate with different creditors, some of which are lenders while others are often trade creditors, and observe how they respond to different asset protection structures.
There is absolutely no doubt that a person who has taken the time to create some type of asset protection structure, even one that is very simplistic, is far better positioned to deal with his or her creditors than the person who has done nothing at all. While this may be self-evident, you also need to consider the creditor’s mindset. The creditor is owed money, under pressue and is faced with the spectre of having to hire legal counsel to try to get paid. The greater the obstacles faced, the more expensive the legal effort will be to collect and thus the more disposed the creditor will be to make a settlement favorable to the debtor.
There are a few simple moves that a person can make to provide a degree of asset protection. Of course, while tax factors and other issues will impact which approaches are most favorable to pursue, everyone should at least be aware of these quickies. Consider using the entireties form of ownership in states that provide for this tenancy. Interestingly, in Michigan, a husband and wife who own money market accounts through a stock broker may be more protected than if they maintain joint accounts at banks. Operate your business using a multi member limited liability company as opposed to a corporation. Your creditors will find accessing your interest in an LLC is much more difficult than levying on corporate stock. On the most simplest of levels, if one spouse is exposed to debt while the other is not, where possible assets should be titled in the name of the nondebtor spouse.
I will leave you with one key message. Awareness and sensitivity to asset protection in everything you do will serve you well. Clearly, nothing will take the place of a fully thought out and strategized plan. However, in the absence of such a plan some of the suggestions here, if properly implemented, will nonetheless enhance your protection dramatically.
Submitted by Howard B. Young