Blogs

 
Why is it Too Late for Asset Protection Planning after a Claim or Litigation Arises?Jay Adkisson has written a very informative article about why it is difficult to do Asset Protection Planning after a claim or lawsuit arises. The article was published in Forbes. At Shenwick & Associates we get many telephone calls and emails from clients about Asset Protection Planning and we summarize that article below.   Clients
often ask whether they can protect their assets after a lawsuit threat appears
on the horizon. Mr.  Adkisson explains in his article, that once a
claim exists, meaningful asset protection planning is unavailable. Under the Uniform Voidable Transactions Act (and its predecessor,
the Uniform Fraudulent Transfers Act), a “claim” arises the moment the
underlying event giving rise to liability occurs—not when a demand letter
arrives, not when a complaint is filed, and not when a judgment is entered. Any transfers made
after that point are vulnerable to attack as voidable transactions.

Many
debtors mistakenly believe they are safe if payments are current or no lawsuit
has been threatened, but the law provides no such protection. Mr. Adkisson states that post-claim
transfers often trigger serious consequences far beyond simply unwinding the
transaction. -Creditors can sue the transferee—often a spouse, child, or
friend—and obtain a judgment for the value of the transferred asset. -Courts may
award attorney’s fees, civil conspiracy damages, or even punitive or trebled
damages if the transfer was intended to evade creditors. In bankruptcy, these
transfers can result in denial of discharge under § 727, converting what might
have been a dischargeable debt into a permanent financial burden.

 Asset
protection planning must occur before any claim exists. However, if a claim exists or litigation has been commenced clients are still allowed to utilize Federal & State Exemption statutes.Clients or their advisors with questions about Asset Protection Planning should contact Jim Shenwick, Esq. 917 363 3391  [email protected]Jim Shenwick, Esq  917 363 3391  [email protected] Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!