Got Assets? Attorney Explains How to Protect Them From Greedy Lawsuits

Got Assets? Attorney Explains How to Protect Them From Greedy Lawsuits

Potential plaintiffs can sniff out money like bloodhounds, and when they catch the scent, watch out. Fight back with advance asset protection planning.

By Steven Orlowski, CFP, CNPR

If you’ve worked hard to build a business, save for retirement, or accumulate real estate, congratulations—you’ve become a potential target. In today’s litigious world, personal injury attorneys, creditors, and even opportunistic acquaintances can smell money like bloodhounds. And once they do, they’re often ready to pounce with a lawsuit, hoping you’ll settle rather than fight.

But there’s good news: You don’t have to be a sitting duck. With advance asset protection planning, you can put legal distance between your wealth and the people who would like to take it from you.

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The Hidden Threat to Your Wealth

Asset protection isn’t just for the ultra-wealthy. Doctors, landlords, business owners, real estate investors—even average folks with retirement savings—face real risks. A single lawsuit, even a frivolous one, can be enough to trigger financial disaster if your assets are unprotected.

Once a lawsuit is filed, it’s often too late. The court system frowns upon “fraudulent transfers,” meaning you can't just move your assets around after you've been sued. That’s why proactive planning is essential.

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Common Lawsuit Triggers

Here are just a few scenarios that can put your assets in danger:

• A tenant slips and falls on your rental property

• A client sues your business for breach of contract

• You’re involved in a car accident and insurance doesn't cover all damages

• You co-sign a loan or personally guarantee a business debt

• You go through a contentious divorce

The legal system is not always just—it rewards preparedness more than fairness.

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Asset Protection 101: Tools of the Trade

So how do you safeguard your hard-earned money? Here are some of the most effective strategies:

1. Separate Ownership with LLCs and Corporations

If you own rental properties or run a business, never hold those assets in your personal name. Use Limited Liability Companies (LLCs) or corporations to create legal walls between your personal wealth and business risks. If someone sues your company or your rental property, they sue the entity—not you personally.

2. Use Asset Protection Trusts

An Asset Protection Trust (APT) is one of the most powerful tools available. These trusts, often set up in favorable jurisdictions like Nevada, Delaware, or offshore (e.g., Cook Islands), can legally shelter your assets from future creditors while still allowing you to benefit from them.

3. Homestead Exemption

Some states, like Florida and Texas, offer generous homestead exemptions, meaning your primary residence may be protected from creditors—regardless of its value. This is one reason many wealthy individuals maintain their primary homes in these states.

4. Retirement Accounts

401(k)s, IRAs, and other qualified retirement plans often enjoy protection from creditors under federal and state laws. Make sure you’re maximizing contributions to these accounts—they not only save on taxes, but also help insulate your future.

5. Insurance is Your First Line of Defense

Liability insurance, umbrella policies, and errors & omissions coverage can absorb the initial blow of a lawsuit. Think of insurance as the moat around your financial castle. But don’t stop there—once the limits are exceeded, plaintiffs can come after you personally unless you've planned ahead.

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Timing is Everything

The best time to implement asset protection is before a problem arises. If you wait until you're facing a claim or lawsuit, your options narrow drastically—and you risk running afoul of fraudulent transfer laws.

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Peace of Mind Through Planning

Asset protection isn’t about hiding assets or evading responsibility. It’s about responsible stewardship—protecting what you’ve built so it can benefit you and your family, not some random stranger with a personal injury lawyer on speed dial.

If you’ve accumulated anything of value—property, savings, a business—it’s time to think like a chess master, not a checkers player. Strategic moves now can shield you from devastating consequences later.

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Final Thoughts: Plan, Don’t Panic

Every client I’ve worked with who took steps to protect their assets sleeps better at night. Why? Because they know that no matter what happens—economic downturns, lawsuits, or personal crises—their financial foundation is secure.

If you “got assets,” don’t wait until you’re served with papers. Work with a qualified estate planning or asset protection attorney to build your legal shield now.