Alan Northcott - Asset Protection for Business Owners & High Income Earners: How to Protect What You Own from Lawsuits & Creditors

for Business Owners and
High-Income Earners:

How to Protect What You Own From
Lawsuits and Creditors

By Alan Northcott

Asset Protection for Business Owners and High-Income Earners: How to Protect What You Own From Lawsuits and Creditors

Copyright 2009 by Atlantic Publishing Group, Inc.

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No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be sent to Atlantic Publishing Group, Inc., 1405 SW 6th Ave., Ocala, Florida 34471.

ISBN-13: 978-1-60138-005-0 ISBN-10: 1-60138-005-4

Library of Congress Cataloging-in-Publication Data

Northcott, Alan, 1951

Asset protection for business owners and high income earners: how to protect what you own from lawsuits and creditors / by Alan Northcott.

p. cm.

Includes bibliographical references and index.

ISBN-13: 978-1-60138-005-0 (alk. paper)

ISBN-10: 1-60138-005-4 (alk. paper)

1. Executions (Law)--United States--Popular works. 2. Debtor and creditor--United States--Popular works. 3. Fraudulent conveyances--United States--Popular works. I. Title.

KF9025.N67 2009

346.73077--dc22

2008052660

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We recently lost our beloved pet Bear, who was not only our best and dearest friend but also the Vice President of Sunshine here at Atlantic Publishing. He did not receive a salary but worked tirelessly 24 hours a day to please his parents. Bear was a rescue dog that turned around and showered myself, my wife Sherri, his grandparents Jean, Bob and Nancy and every person and animal he met (maybe not rabbits) with friendship and love. He made a lot of people smile every day.

We wanted you to know that a portion of the profits of this book will be donated to The Humane Society of the United States. Douglas & Sherri Brown

The human-animal bond is as old as human history. We cherish our animal companions for their unconditional affection and acceptance. We feel a thrill when we glimpse wild creatures in their natural habitat or in our own backyard.

Unfortunately, the human-animal bond has at times been weakened. Humans have exploited some animal species to the point of extinction.

The Humane Society of the United States makes a difference in the lives of animals here at home and worldwide. The HSUS is dedicated to creating a world where our relationship with animals is guided by compassion. We seek a truly humane society in which animals are respected for their intrinsic value, and where the human-animal bond is strong.

Want to help animals? We have plenty of suggestions. Adopt a pet from a local shelter, join The Humane Society and be a part of our work to help companion animals and wildlife. You will be funding our educational, legislative, investigative and outreach projects in the U.S. and across the globe.

Or perhaps youd like to make a memorial donation in honor of a pet, friend or relative? You can through our Kindred Spirits program. And if youd like to contribute in a more structured way, our Planned Giving Office has suggestions about estate planning, annuities, and even gifts of stock that avoid capital gains taxes.

Maybe you have land that you would like to preserve as a lasting habitat for wildlife. Our Wildlife Land Trust can help you. Perhaps the land you want to share is a backyardthats enough. Our Urban Wildlife Sanctuary Program will show you how to create a habitat for your wild neighbors.

So you see, its easy to help animals. And The HSUS is here to help.

Dedication

To my wife Liz

long may we continue

to adventure together through life!

The area of the law known as asset protection has been receiving a great deal of publicity in recent months. As real estate prices drop and the economy falters, both wealthy and average Americans realize that their assets are exposed not only to the risks of the day-to-day market forces, but also to the risk of seizure by creditors. In a down economy, this risk of seizure becomes much more pronounced.

As real estate investors and business owners experience significant slow-downs in their businesses, they become unable to perform on their loans and leases. In many cases, a default on the loan allows the lender to seek a deficiency judgment or to pursue the borrower on a personal guaranty. This places all assets owned by the borrower at risk.

If the economy was not bad enough, our daily activities expose our assets to great risks. Parents with teenage kids who drive find out that the kids can be a great source of liability exposure. A surgeon may find that his malpractice coverage will not cover all claims. A widow may find that the inheritance she received from her husband is sought by his creditors. A business owner may be sued by his employees or customers. Both life and business are full of risk. If the risk results in a claim and a subsequent legal judgment, the plaintiff becomes your creditor. He can now use that judgment to seize your assets. Everything you have worked for your entire life can be lost in one swoop. Fortunately, it is easy to protect your assets from the risks we all face.

There is no silver bullet structure in asset protection planning. Attorneys pick from dozens of available structures, based on your risk exposure, your risk tolerance, the types of assets you own, and the aggressiveness of your likely creditor. The dozens of structures at play have one thing in common. They all transfer assets out of your name.

Limited liability companies, limited partnerships, irrevocable trusts and post-nuptial agreements are all examples of commonly-used asset protection techniques. These structures are straightforward, usually tax neutral and effective. All that they require is willingness to act and access to good advice.