Thinking about asset protection planning after a claim has already arisen is certainly an all too common experience. In fact, it can actually make matters much worse. It is a common misconception that a judge can simply dial things back and act as though a fraudulent transfer has never happened, leaving you protected because you took late planning steps.
Anyone who assisted in what could be viewed by the courts as a fraudulent transfer, as well as the debtor could become liable for the creditors’ legal fees and the debtor can also lose any chance of getting that debt discharged in bankruptcy. Late planning can usually backfire, which is why it is definitely in your best interests to approach asset protection planning holistically well in advance.
The best way to protect yourself is to minimize the chances of a claim before they arise. If a claim does happen, the steps you have already taken to protect yourself mean that not all of your assets are exposed to creditors or other risks. While most people don’t like to think about these challenges until they happen, it is well worth your time to view asset protection planning as something of an insurance policy that gives you some protection in the event that things go wrong in the future.