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What Is Asset Protection?

What Is Asset Protection?

Asset protection is a compilation of methods available to safeguard assets from those who may be entitled to claims against them.  Some examples of people who may be entitled to assets are creditors trying to claim entities or former spouses who are trying to claim what they perceive to be rightfully their own.  

More specifically, asset protection is a set of permissible legal techniques dealing with the protection and controllership of individuals and business entities' assets from civil money judgments. Most businesses need protection for their assets whether it is an intellectual asset or a physical asset. 

An example of an intellectual asset is a brand name or license which cannot be tangibly held or taken.  On the other hand, physical assets can consist of things such as equipment, accounts receivable, homes, and savings.  

The end goal of asset protection planning is to shield assets from claims of creditors while also avoiding illegal measures such as concealment or tax evasion.

The action of protecting the assets can be carried out in a number of different ways.  It is important to note that the assets that are seemingly always untouchable or protected are those which do not hold a legal title.  

A simple and reasonable analogy can be made between the goal associated with asset protection and bankruptcy.   

For example, when a borrower has very few assets, bankruptcy is the most intuitive route to take.  Similarly, when the borrower or owner has significant assets, asset protection is typically the most sensible solution to any problem.


Typically, the goal of a wide-ranging asset protection system is to drastically reduce risks by insulating the exposure or vulnerability of business and personal assets from the claims of creditors.  Sadly, most business owners and people are uninformed about all of the risks that can potentially harm their business.  

If this is the case, then they are also unlikely to understand options available to protect their business and personal assets.

There are a number of different strategies that individuals and businesses can use to protect assets.  There are different strategies or plans offered by numerous law firms and companies around the world.  Because there are so many options, it is important to look around for the right plan.  

In considering the right option, it is best to choose the plan or strategy that best protects a specific type of asset rather than a general all encompassing plan.  Some of the different strategies and plans involved in asset-protection planning include separate legal arrangements, such as corporations, partnerships and trusts.  

The most popularly used strategies for lawfully protecting assets of a business include using limited liability companies (LLC), disconnected entities for certain business tasks, using specific insurance policies as protection and various other strategies.

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