Yes, as long as you’re not doing it to commit a fraud on those creditors. In periods of economic turmoil, we often see an increase in litigation by people and entities that are trying to regain some ground or who have the right to claw back ill-gotten gains.
There are techniques you can use that protect your assets from unforeseen events. These can be used as part of an estate plan or as part of how you structure your business.
That said, your efforts to shield your assets will likely fail if you commit either explicit or constructive fraud. Explicit fraud would be when you knew it was likely a particular creditor is coming after your assets. Constructive fraud is generally inferred by the court, and it can infer you intended fraud when you transfer an asset without getting something of approximately equal value in return.
Estate planning asset protection may mean an irrevocable trust
A trust is a separate legal entity from you. That means that the assets backing a trust are generally considered to belong to that trust, not to you. If someone comes after your assets, any you had previously transferred into an irrevocable trust are no longer yours for them to seize.
There are a host of different types of trusts available, so you should discuss your goals with an attorney in order to identify the trust that is right for you.
Business entities can shield personal assets from business creditors
In estate planning or as part of business organization, you can transfer certain assets in exchange for an equally valuable interest in an LLC or LLP. Or, you can exchange assets for an annuity or a similar legal interest. In either case, the original asset is no longer yours to be seized and the interest you have exchanged it for is generally not attachable by creditors.
You can’t use these techniques to stop existing creditors
Again, it’s important to understand that your transfer of assets could be considered fraudulent if you have reason to know that a creditor is coming after those assets for debt.
If you are interested in asset protection for yourself or your business, contact an experienced attorney today.