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If you are "wealthy", "comfortable" or even if you just have
some positive net worth, most likely you are concerned about keeping what you have, and preventing others from taking it.
This concern is real, as there are people who will take advantage of any opportunity to take what you have.
If you
are a physician you are aware of horror stories about colleagues who lost everything after being held liable for medical malpractice
in amounts far beyond their malpractice insurance.
Asset protection planning enables you to employ legal techniques
to prevent anyone from taking your assets. However, there are limitations as to what you can and cannot do.
Your degree
of exposure to risk of liability, the type of assets you own, and your total net worth are essential factors to consider when
you and your consultant develop a strategy for asset protection. Your occupation can be one indicator of the risk of liability
-- for example, a pyrotechnics engineer has tremendous occupational exposure. Statistics can help you decide your risk factor,
and help you to assess what kind of asset protection you need.
Insurance is the most common asset protection technique. By "transferring"
the risk to an insurance company, you can usually protect your assets. But even if you buy insurance, it might not cover all
possible risks that you face, or the amount you buy might not be sufficient, or the insurance company may be able to deny
the claim (perhaps it could claim there were misstatements made in your application), or the insurance company may become
insolvent. Asset protection planning helps you prepare for these "wild-card risks".
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