Know When To Fold.

Date : July 3, 2008

Here is a short and simple thought for you to process over the upcoming Fourth of July weekend.

When do you use Asset Protection Planning as a substitute for litigation?

The answer is simple: NEVER, unless you are ready, willing and able to leave the country.

Recently a number of people with serious litigation risks have contacted me hoping that a solid Plan will allow them to avoid the hugely expensive and distracting burden of defending themselves. It seems logical that there is no reason to go to the huge expense of mounting a defense if you have a good Plan in place. After all, if the bad guys can’t get to your stuff, why worry about defending it.

Unfortunately, Asset Protection is rarely a viable alternative to mounting a defense.

Remember, if you take the easy way out and do not defend yourself from an attack, whether meritorious or not, your opponent will eventually get a default judgment against you. These default judgments are like herpes, they never go away and haunt you until the day you die. The judgments will hurt you at some time and will be on your record as long as you live in the USA. Remember, we have the Full Faith and Credit Clause and, as a result, every judgment will follow you to wherever you live for as long as you live (and even after you die until your estate is settled).

This is not true if you live abroad. A default judgment will not normally be recognized abroad. Many countries simply refuse to even hear cases built on a default judgment on the basis that the parties never had a chance to present their unique facts. This can be helpful, but only if you are not in the USA.

Walking away from a litigation attack without defending yourself is a lot like going bare with insurance. Also, a bad idea. Asset Protection Planning is also not a substitute for insurance. They work together, but remember, one of the main benefits of insurance is that most policies force the insurance company to provide you a defense (more on this next week!).

I hope these two thoughts were helpful to you.

Have a healthy and protected Fourth of July weekend.

Rob Lambert

ABOUT THIS EDITOR:

Rob Lambert, Founder and former law professor is considered to be foremost expert on tax compliant asset protection structures. A contributing editor to Lexus Nexus debtor creditors series of law books Rob's passion is implement client wealth plans that stand the test of time and hold up under duress.

Full Bio - Email Rob