[hannah]

Family Finances: Simple ways to protect your assets from creditors

Friday, August 08, 2008

Gail Liberman and Alan Lavine

Is this lousy economy putting your family among those who suddenly have more debt than assets?

Asset-protection attorney Robert Klueger, of Encino, Calif., says that if you're finding yourself in financial trouble, there are a couple of broad rules of thumb.

Chief among them: Take action sufficiently before you can't pay your bills. Once you're sued, any move to transfer assets could be considered a "fraudulent conveyance." Creditors may be able to seize your assets on that basis.

Be sure to contact an attorney because rules vary from state to state. Nevertheless, here, Mr. Klueger says, are some general ideas to explore:

• Most retirement accounts are exempt from creditors -- even if you have a judgment against you. So it can pay in more ways than one to fully fund your retirement accounts. Exceptions to this rule: Cases of divorce and retirement plans in which the owner of the plan is the sole plan participant.

• In certain states, married couples might be able to protect property by owning it as "tenants by the entireties." With this type of ownership, the consent of both owners is required before spouses can part with property, Mr. Klueger says. If both spouses are sued, however, this might not work.

• Offshore accounts may present one way to help protect your cash from creditors -- even if a deficiency judgment is issued. Mr. Klueger says that even if a creditor goes after a Swiss bank account, the creditor is not likely to get it. Use care with offshore accounts, however. While you can transfer money offshore for asset protection, you can't transfer money offshore to escape federal income tax. You also must beware of money laundering laws. "The days in which the Swiss banker would take your money and not ask questions are long gone," Mr. Klueger warned.

• If there's a chance that your wages can be garnished by a creditor, Mr. Klueger suggests you might explore potential options with an attorney in your state.

Consider that any strategy you take may have exceptions, based on state laws. Always consider your state homestead rules and state rules on "deficiency judgments" With a deficiency judgment, a creditor may go after you for the amount still owed if a sale of the underlying asset fails to cover your debt.

Before seeking asset protection, Mr. Klueger suggests, evaluate the following issues:

• Who do you expect will sue you? If it's a plaintiff in a car accident, for example, an attorney is apt to be taking any case against you on contingency in search of a quick settlement. By contrast, a bank may decide to chase you to the end of the earth -- despite the legal cost. The lengths you go through to protect assets may vary accordingly.

• Who will the defendant likely be? If only one spouse guaranteed a corporate debt, for example, a plaintiff likely can't collect from the spouse that didn't sign. At least, that's the case in separate property states, such as Pennsylvania.

• What is the nature of the claim? Certain claims can be discharged through bankruptcy. Other claims can't be.

• What is the nature of assets you're looking to protect? Cash, for example, might be protected in an offshore account. By contrast, you certainly can't move all your real estate to Switzerland!

Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Quick Steps to Financial Stability" (Que/Penguin). You can contact them at Welcome to the web site of husband-and-wife authors and syndicated columnists Alan Lavine and Gail Liberman - Home.
First published on August 8, 2008 at 12:00 am

Link to article in the Pittsburgh Post Gazette.

[jlynn]

...marking time

[hannah]

Originally Posted by jlynn

...marking time

<hannah is scratching her head and wondering wtf jlynn is talking about. hannah would use her special emoticons for this but our lovable Cotton Swab leader deleted all of them in the last upgrade>

[jlynn]

Originally Posted by hannah

<hannah is scratching her head and wondering wtf jylnn is talking about. hannah would use her special emoticons for this but our lovable Cotton Squab leader deleted all of them in the last upgrade>

<jlynn thinks Hannah must be the one on the right already , because if she thought about it for 1/2 a second she would know why I was setting the timer, and also Cotton is a swab not a pigeon >

Jlynn is now humming tune from Jeopardy.

[jlynn]

Originally Posted by jlynn

Jlynn is now humming tune from Jeopardy.

Jlynn's lips are now numb. If Hannah would check her email although it is on a different issue, the subject of the email might explain what she is talking about.

[VexatiousLitigant]

Just have no assets. Simple.

[stargazer0725]

<stargazer is wondering if she's going crazy, or if anyone else is hearing other people's thoughts...>

[jlynn]

Originally Posted by stargazer0725

<stargazer is wondering if she's going crazy, >

Yes

[stargazer0725]

I guess I'm starting to appreciate that popular saying (used heavily by my dearly deceased grandfather), "Call me crazy, but never call me late for dinner." So what are you serving jlynn??? I can be out your way in 90 minutes or so!!

[jlynn]

I dunno, I don't cook - that's Hubby's job.

[Hedwig]

What happens when he's gone?

[jlynn]

Originally Posted by Hedwig

What happens when he's gone?

Get in the car kids, we're going to Sonic!

[Hedwig]

Isn't that like a whole day trip?

[jlynn]

Originally Posted by Hedwig

Isn't that like a whole day trip?

Actually no. Its a day trip to McDonald's.