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California Asset Protection: Your Attorney on Radio’s June 26 Broadcast

Thursday, 01 July 2010 19:28 Last Updated on Thursday, 01 July 2010 19:28 Written by admin 0 Comments

Nine fatal asset protection planning mistakes

During the June 26 broadcast, San Francisco-area attorney Madan Ahluwalia and Phoenix attorney Ike Devji discussed the nine fatal mistakes people make when it comes to asset protection.

  1. Failing to act when the waters are calm, before an issue, exposure or threat arises. You can’t insure a vehicle after it is totaled or insure a home once it has burned down.
  2. Thinking they’re not “rich” enough to require asset protection. This mistake is often perpetuated by accountants and lawyers, but protection is available at almost any level of net worth. Ask yourselves these questions:
    1. If you lost what you have today or some significant portion of it, could you earn it back?
    2. Do you have assets that would be difficult or impossible to replace in light of your age, your health or the current economy?
    3. Are you financially and legally prepared if you are sued for a matter that isn’t covered by your insurance or the amount awarded is above the limits of your liability coverage?
  3. Relying on traditional estate planning. There’s a difference between life planning (i.e., asset protection) and estate planning, which is death planning.
  4. Putting too many eggs in one basket. You must subdivide assets so that they are protected from the owner and from each other.
  5. Using the wrong tool or funding the wrong legal tool. An asset protection advisor needs to know the pros and cons of the various asset protection tools. There is no such thing as one-size-fits-all planning. The plan must fit what the person does, what the assets are, what the person’s risk level is and what use the person will have for the assets.
  6. Accidentally or unintentionally dragging liability into an asset protection plan. Sometimes people pull in risky items such as automobiles into the asset protection umbrella. If you lease or buy your vehicle through your business and then you’re in a car accident, you expose the entire business to liability.
  7. Relying on gifting strategies. You can’t transfer all of your assets to your spouse or children, especially after something has happened. It will be regarded as fraudulent and the transfer will be set aside.
  8. Using unproven, poorly structured tools or scams such as the “friendly lien.” The friendly lien is a legally dubious strategy in which a limited liability corporation, or LLC, puts a lien on a valuable asset you own and the lien is recorded and executed. The lien may claim that you were loaned $300,000 when, in fact, no money was lent. Liens have deterrent power if they are real. A false lien may also expose an individual to perjury charges.
  9. Relying on insurance alone or failing to adequately insure. Buy every dollar of liability insurance you can afford.

Contact Madan Ahluwalia

For more information about asset protection, contact Madan Ahluwalia at Ahluwalia Law P.C. by calling 650-331-1968 or e-mailing madan.ahluwalia@ahluwalia-law.com.

Based in Redwood, Calif., Ahluwalia Law is a general practice law firm assisting clients with a variety of cases, including but not limited to immigration law, business services, civil litigation, estate management, loan modification and bankruptcy, family law and personal injury.

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This entry was posted on Thursday, July 1st, 2010 at 7:28 pm and is filed under Asset Protection, Radio Talk Show. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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