More lawsuits are filed in the United States each year than in the rest of the world combined. While many of these lawsuits may seem frivolous, you never really know what a judge or jury will decide. In addition, half of all marriages end in divorce, and the number of bankruptcies in the U.S. is staggering. All of this explains why asset protection planning is one of the fastest growing areas of the law, and why every estate plan should have a robust asset protection component.
At Amoruso & Amoruso LLP, we protect our clients’ assets using a combination of proven strategies and tools. These include exempting assets from creditor claims, limiting liability through legal entities, and transferring risk through insurance.
Exempting Assets in the State of New York
Federal and state laws exempt some assets from the claims of creditors. While certain states allow you to choose between federal and state exemptions, in New York you must use the state exemptions. Once you have identified and safeguarded asset classes available to you under the law, it may be wise to increase your protection by converting non-exempt assets into assets that are exempt.
Protecting Professionals and Business Owners
Certain professionals, such as physicians, attorneys, and financial advisors, as well as business owners, are particularly vulnerable to lawsuits. Many operate their businesses as sole proprietors rather than legal entities like Corporations or Limited Liability Companies. While the informality of sole proprietorship may be appealing, structuring one’s business through the use of legal entities can offer substantially greater asset protection. Lawsuits brought against sole proprietorships are, in effect, lawsuits against the business owner’s personal assets. Legal entities can protect personal assets and choosing the appropriate entity is crucial for limiting risk to both the business and one’s personal assets.
Using Insurance to Transfer Risk
At the most basic level, insurance involves paying a premium you can afford to protect against a risk that you can’t afford. Many professionals and business owners purchase insurance but then fail to review it periodically to ensure the policy reflects changes that have taken place in the business and in the entrepreneur’s personal situation. Keeping your policy up to date is essential, as is understanding the risks you have retained and the ones you have transferred.
To learn more about how we can protect your business and your personal assets through comprehensive planning, contact us to schedule a consultation.