Sources of Liability fall into several categories:

Debts

• Child support
• Medical bills
• Taxes
• Legal bills
• Business loans
• Personal loans
• Real estate loans
• Personal guarantees
• Alimony

Accidents

• Professional malpractice
• Auto accidents
• Homeowner accidents
• Rental property accidents
• Sporting accidents

Legal violations and wrongful acts

• Environmental violations
• Civil rights violations
• Labor law violations
• Criminal violations
• Sexual harassment violations
• Slander

  Liability for acts of others

  • Partners
  • Employees
  • Family members
  • Those who use your vehicles

  In most cases, debts are under your control, but when combined with other unexpected liabilities, they may overwhelm your ability to meet all of your obligations.

  Techniques

  Many of the traditional forms of estate planning can be used effectively as asset protection techniques. Gifts of property that are not intended to defraud creditors will remove the assets from your estate. If your child owns the farm, not you, it is no longer at risk from your creditors.

  Retirement plans have a significant amount of asset protection built in due to federal and state law. Spendthrift provisions in life insurance contracts and certain trusts can prevent creditor attack while the assets are outside the hands of the beneficiary. Conducting your business as a corporation, using limited liability companies, limited partnerships and other business entities afford considerable personal liability protection as well as possible tax advantages. When considering an asset protection plan, these traditional forms of asset protection should be the first ones considered. But they may not be enough.

  Some basic types of asset protection include investing in retirement accounts that are protected by the government from creditors (these vary from state to state) as well as some simple methods of setting up your business. Two popular examples of these are Family Limited Partnerships (FLP) and Limited Liability Companies (LLC). By setting up your business in one of these ways, you will be able to protect your individual assets (at least to a point) from any business problems. Basic partnerships or sole-proprietorships cannot usually afford the asset protection that FLPs or LLCs can.

  If you are someone who needs more asset protection than the above options can offer (you can usually discern this through a risk analysis), you may consider more complex methods, such as certain types of trusts, or even offshore asset protection. The types of asset protection you need can sometimes be hard to determine. If you are unsure, or need assistance with beginning your asset protection plan, you should consult with a qualified and experienced estate-planning attorney or financial advisor to decide the safest and most productive method of asset protection for you.