As published in MACPA Statement – October 2015 Clients spend their entire careers working hard and accumulating wealth; and once they’ve “made it,” their primary interest is in holding onto what they have. Clients, therefore, have a keen interest in establishing an asset protection plan – a plan that will protect their assets from being legally seized and sold by a claimant who sues them. At its core, asset protection planning is a “Plan B.” Plan A is:
- Not being sued.
- If suit is filed against your clients, Plan A is winning the suit.
- If your clients lost the suit, Plan A is having an insurance policy that will pay the claim.
Plan B is everything else. Your clients need a Plan B as we live in a world that is increasingly litigious. More suits are filed in the United States than all of the other countries of the world combined. Clients, therefore, need to be prepared for a lawsuit that they can lose. Otherwise, they could lose the assets that they own. Shakespeare said in one of his plays, “The first thing we do, let’s kill all the lawyers.” Obviously, that hasn’t occurred as there are 1.2 million lawyers in the U.S. Believe it or not, there are more lawyers than (i) doctors (there are 945,000 doctors), (ii) firefighters (there are 800,000 firefighters), and (iii) policemen (there are 900,000 policemen). To make matters worse, there are 15 million civil cases filed in the United States every year. This is due to the fact that:
- Attorneys can be engaged on a contingent fee basis.
- The losing party isn’t responsible for the payment of attorney’s fees incurred by the winning party.
There is, therefore, no penalty for claimants who file suits of questionable merit. Fortunately, your clients may be able protect themselves from future protection claims by having an adequate insurance policy in force. But, there’s no guaranty that an insurance policy will always provide protection to your clients as:
- All policies have a coverage limit (the claims filed against your clients may exceed the policy’s coverage limit).
- All policies have exclusions from coverage (the claims filed against your clients may be excluded).
- And unfortunately, some insurance companies refuse to pay claims that they’re legally obligated to pay as insurance company’s greatest expense is what it pays out in claims. If it pays out less in claims, it keeps more in profits.
So, how can you really protect your clients from potential future claims – by establishing an asset protection plan. Read the second part of Maurice Offit’s article in the next MACPA quarterly publication – it will set forth the steps that your clients should follow to protect their assets from future potential creditors.
ABOUT MAURICE OFFIT
email@example.com | 301.575.0308 Maurice Offit is an estate planning attorney, co-founder of Offit Kurman Attorneys at Law and a member of the firm’s Management Committee. Mr. Offit counsels a large number of clients who share an interest in minimizing estate taxes and asset protection from the claims of creditors. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.
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