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The Six Most Dangerous Myths of Asset Protection
Myth
#1: Only criminals or the wealthy need to protect their assets.
Truth: Many frivolous lawsuits are filed against defendants
who are not guilty. You’re a target if you own visible assets valued above the cost of litigation.
Example: If you
have available assets of $250,000 and the cost of the litigation is only $50,000, you might as well have a big target painted
on your back.
Myth #2: Incorporation will protect you from personal liability in lawsuits.
Truth: If the legal
corporation doesn’t have enough insurance or assets, plaintiffs often sue the corporation’s directors and officers. If you’re
a corporate stockholder, creditors may claim your shares or other obligations.
Myth #3: Liability insurance is all
you need to protect your assets from creditors.
Truth: Your insurance company could deny your claims for coverage.
Your insurance company could become insolvent, or go broke like HIH, leaving you liable. Your insurance company could pressure
you to admit guilt.
You could be sued for an amount above the limits of your insurance coverage. (Greedy attorneys and
plaintiffs want both your insurance and your assets!) After you pay your excess and your liability insurance is maxed out,
guess who’s liable for any remaining balance - you are!
Myth #4: Transferring your assets to your family will protect
them from creditors.
Truth: Now, their (your) assets are exposed to their legal liability of lawsuits. Many assume
they can transfer ownership of their assets to friends or family if they’re ever named in a lawsuit or threatened by the government.
Guess
again! You could even be charged with obstruction of justice if the transfer was to avoid collection by a government agency
and done within 30 months of the action being started.
Unless the ownership transfer occurred long before the lawsuit claim,
the court will consider it a fraudulent conveyance. If you became financially insolvent, then the gifts are legally invalid.
Myth
#5: Hiding your assets will protect them from creditors.
Truth: There’s no longer any privacy in Australia. Your creditors
can find your assets by using court examinations, subpoenas, depositions, or professional asset searches.
They’ll search
your tax returns, loan applications, leases, bank account records, motor vehicle registrations, real estate property titles,
council rates, insurance policies, credit bureau records, your computer hard drive, and more! Welcome to the Information Age.
Big Brother is watching your finances!
Myth #6: The Australian justice system will protect your innocence.
Truth:
Twenty-first century Australia is becoming more and more like Mexico- “with liberty and justice for all who can afford it.”
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