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Good Lawsuits...NOT!

By Rob Lambert - Email Editor

Date: Dec 15, 2005

It is no secret that I think Asset Protection Planning is important for anyone with two nickels to rub together. This planning can run the gambit from the implementation of a full-blown, offshore-based plan, to pension/IRA planning, to relatively simple steps such as homesteading your home. At different phases of your life, different types of planning are appropriate.

All Asset Protection Planning techniques are designed to help you preserve and maintain your “stuff;” whatever it is. If you worked for this “stuff,” you want to keep it, simple as that.

It is important to understand one thing that Asset Protection Planning will not do: It will not stop lawsuits. If you are perceived as having something worth taking, you can count on the fact that there is someone else that will want it, and they will hire a tort lawyer to try and take it away from you. This is regardless of whether or not you have an Asset Protection Plan in place.

FACT: ASSET PROTECTION PLANNING DOES NOT STOP LAWSUITS.
Nearly every week I get a call from a person who wants to implement a Kinetic Asset Protection Plan, thinking it will stop lawsuits. They will still come. All a plan does is destroy the economic incentive to pursue a case. Once you have a plan properly implemented when the financial seas are calm, when that dreaded suit comes, you now have an effective tool to favorably settle that suit.

So, I encourage my customers to not expect any Asset Protection Plan to stop the dreaded suit. The Plan just gives you an effective tool to get out of the suit. This simple fact also changes the landscape a bit. For example, once this simple fact is understood, it soon becomes clear that keeping basic insurance in place to provide a defense makes great sense. It also soon becomes clear that relying on stealth alone (e.g. phony Nevada Corporations and similar techniques) are nearly worthless as a deterrent. Why? Because the basis of these terrible techniques is stealth, and the facts of the plan cannot be safely disclosed. All solid planning should assume that the bad guys discover the details of the plan. In fact, in many cases one of the techniques we utilize is to actually disclose the generic structure of the plan to the attorneys to force settlement. Once a plaintiff and his lawyer realize that they will spend a dollar to collect ten cents, they often go away or settle.

SOME THOUGHTS ON SETTLEMENTS.
We all hate lawsuits, (well, almost everybody!). They take up a lot of time and money; and they are seldom fair. Even so, I often say to clients facing an expensive and burdensome suit: A BAD SETTLEMENT IS ALWAYS BETTER THAN A GOOD LAWSUIT. In the same way that most greedy tort lawyers will not litigate on principle, a protected person should not defend a suit on principle alone. Sometimes paying a little blood money to some rotten extortionist is better than spending ten times the blood money on legal fees to defend yourself.

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