What, Me Worry?

Why should we worry about protecting our worth?  What are the chances that my assets might be seized by a creditor or the government?  I don’t do anything wrong.  I pay my taxes.  I have never been sued.  Why worry about going through the time and expense and headache of setting up an asset protection plan anyway?
It is true that asset protection planning isn’t for everyone.  But really the only criteria to consider is whether you have any assets worth protecting.  If the answer to that question is yes, then without question it is advisable that you take measures to protect them.  Here’s why.
We live in an overly litigious society.  Opportunistic plaintiffs combined with an abundance of overly zealous lawyers have created an environment where lawsuits are filed (or at least threatened) with alarming regularity.  Consider the possibility that you may be involved in a traffic accident, or that your child might cause personal or property damage for which you are responsible, or that you may be sued personally for something that occurs in your professional capacity.  There are numerous examples of individuals suffering catastrophic financially ruinous consequences due to having not properly planned to survive such an event.
What about insurance?  Shouldn’t insurance cover me in situations like these?  The answer is usually, but not always, yes.  There are two problems, however.  First, in situations where a large amount of money is involved, a claims adjuster’s job is to find a way to not pay.  The fine print of the policy will be carefully picked apart and analyzed looking for some loophole the insurance company can use to avoid coverage.  Second, insurance policies have limits.  A one million dollar insurance policy is going to offer only minimal benefit if you are hit with a ten million dollar verdict.
That brings me to what is in my opinion the most important reason to engage in asset protection planning: the unpredictability of judges and juries.  A former colleague of mine who has been litigating cases in the courtroom for over fifteen years said something to me recently that I will never forget.  He said “When you’re in law school, you think the law is what it is.  It turns out that in the courtroom, the law is whatever the judge wants it to be.”  The most striking, eye-opening realization I have observed as a lawyer is the general incompetence of our nation’s judges and juries.  To be sure there are exceptions, however to rely on a judge knowing and understanding the law and how to apply it correctly in any case would be foolish.
So to summarize, if you have wealth and haven’t engaged in asset protection planning, you should worry.

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