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4 Myths about Asset Protection

| July 21, 2012

Asset SecurityBefore we talk about what asset protection is, let’s talk about what it is not. You will certainly encounter numerous misconceptions and urban legends on this subject. It’s important to dispel these dangerous and damaging lies because, as the proverb states, “Show me a liar, and I’ll show thee a thief.”

In my book Lawyers are Liars- The Truth About Asset Protection I begin by dispelling some of the most common Myths in Asset Protection. (I’ve made a few enemies in the process).  I promise you that this information can save you thousands of dollars, as well as a tremendous amount of time and heartache. Let’s begin our asset protection journey by first destroying these myths.

Myth #1- Asset Protection is an all or nothing proposition.
Wrong. You can start now by taking small steps to protect your assets and add additional protective barriers as your income, assets, and your needs change and grow. Small steps help lead us to take bigger financial steps.  A well known author on asset protection strategies, Arnold S. Goldstein, states “You will find there is no single correct formula or ‘quick fix.’”  It truly is a process of starting with basic planning and doing “the little things” until your circumstances become more complex.  Ultimately, you will tailor systems, structures, and strategies to your particular situation.

Myth #2- Asset Protection is expensive and I have to go to an attorney for a complete plan.
Wrong again. Asset protection can be as simple as taking advantage of certain statutory exemptions in your state, refinancing your personal residence, buying additional insurance, or placing your assets and businesses in a more advantageous structure or business entity.  Jay D. Adkisson very carefully points out that, “When attempts are made to place assets out of the reach of creditors, one of the first-line strategies is focused on the most effective uses of the asset exemptions allowed under Federal and State codes.” In Chapter Ten of Lawyers are Liars I discuss the simple and basic exemptions you may already be entitled to that don’t require hiring an attorney to use. It doesn’t start with paying an attorney; it begins with understanding your options.

Myth #3- I don’t have anything to protect, so I don’t need to worry about asset protection yet.
A serious Myth. Wealth is relative and you don’t have to have millions of dollars to require asset protection planning. The equity in your home might be only $50,000 to $100,000, but that could represent years of hard work and struggle in making a house payment every month. You can certainly take a few simple steps to protect your home’s equity without creating an elaborate structure.

Myth #4- I have an insurance policy and thus I’m completely covered.
Completely False. Do you really want to risk all of your assets on the opinion and whims of an insurance adjustor as to whether or not your claim should be paid? Duncan Osborne, an attorney who teaches the truth in asset protection has warned others about this false sense of security and stated: “While liability insurance was once the trusted shield from potential economic devastation resulting from a civil judgment, individuals with “deep pockets” are increasingly susceptible, irrespective of their insurance coverage.”Now please don’t misunderstand me. Insurance is an important part of protecting our assets. I discuss it in detail in Chapter Seven and highly recommend its use. However, I also think it is ridiculous to put all of our “eggs in one basket.” Please don’t think that insurance is the “be all and end all” to a properly conceived and implemented asset protection plan.

Mark Kohler CPAMark J. Kohler, CPA, Attorney at Law and Author of the Best Selling Book Lawyers are Liars- The Truth About Protecting Your Assets and his new book What Your CPA Won’t Tell You. Mark Kohler is an attorney, CPA, entrepreneur, best-selling author, national speaker, radio show host, news contributor, & pundit. He is leading voice for entrepreneurs and small business owners, having taught thousands of people how to take control of their own financial future through his powerful business, tax, & legal strategies. You can also find him on AgeNation Radio as host of the The Mark Kohler Show (MKS – Coming Soon). For more information visit www.markjkohler.com.

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Category: Life Transitions

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