Asset Protection

There are two key concepts when it comes to legally protecting your assets from future judgment creditors:  Structural Formality and Advanced Planning.

Structural Formality is necessary in creating any liability limiting device.  At Vondrak Law we encourage the use of business entities such as the Limited Liability Company (LLC) and the use of vesting mechanisms such as the Irrevocable Trust or the Delaware Statutory Trust.   These devices need to be particularly structured to maximize their protection.  With a business entity, it is necessary to organize and operate the business with clear separation from your personal assets.  This prevents a potential creditor from "piercing the corporate veil" and pursuing you as an individual.  In regard to an Irrevocable Trust, it is important to structure it in such a manner whereby the settlor relinquishes certain powers while retaining others.    The good news is that both structures can be designed and operated in a manner that allows you to maintain a degree of control over your assets.

Advanced Planning is necessitated by rules and laws that aim to prevent a transfer of assets referred to as a fraudulent transfer.  This type of transfer is typically marked by an intent to avoid creditors.  Depending on the type of asset transferred and to whom it is transferred, the law may allow a creditor to "claw back" the asset or to pursue the transferee of the asset.   This doesn't mean that steps can't be taken to protect your assets after a liability inducing event has already occurred, but it makes a much stronger case to have developed a plan in advance of any such event.

It is important to remember that no asset protection plan is 100% foolproof, but we can assist you in making your assets legally difficult for your creditors to pursue.