What is Asset Protection: Do You Need an Asset Protection Plan?

Oct 2, 2021 | Trusts, Estates & Wills

Imagine losing everything you own from your house to your savings within a few days or months. This could happen if a creditor, former spouse, employee, etc., successfully sues you.

You could face a lawsuit because of negligence, contractual disputes, vehicular accidents, family disputes, inability to meet financial obligations, partner disputes, professional malpractice, employee harassment, etc.

The only way to stop anyone from legally seizing your individual or business asset is to secure them from court rulings.

What does asset protection mean? Asset protection involves using legal strategies to protect your valuable assets from seizure, taxation, divorce, lawsuits, civil money judgments, or other losses. It is an important part of financial planning used by businesses and individuals to guard their wealth without getting involved in tax evasion or perjury.

Now that you have the quick answer to “what is asset protection,” read on and I’ll answer some of the key questions you might have about this topic.

What does asset protection do?

The key thing asset protection does is that it gives you a legal way to protect your personal and business assets from creditors should you face a lawsuit.

With asset protection, individuals or businesses don’t have to engage in illegal activities like hiding assets (concealment), fraudulent transfer, bankruptcy fraud, and tax evasion, to safeguard their valuable assets.

Asset protection also ensures you’re not an easy mark for those targeting your assets. For example, if a creditor or former spouse knows you have protected your assets, it may deter them from suing you because they know they can’t put a claim on your investments, property, bank account, etc.

Also, the first thing a lawyer does when looking to file a claim is to search public records to see what assets you own. If they can’t find any because they are held jointly with family members, for example, they’re unlikely to take up the case.

When is the right time to initiate asset protection?

If you’re likely to be sued and you have lots of assets, you should be proactive and establish asset protection now if you haven’t already done so. At Gallagher Krich, APC, we believe asset protection should be set up before a liability or claim arises because doing so when creditors are already looking to seize your assets is too late and unlikely to provide you with any worthwhile asset protection. From our experience, the longer you have asset protection, the safer your assets are.

If you’re a debtor with few assets, filing for bankruptcy could be a better legal route to take than setting up an asset protection plan. Also, if the only assets you have are your retirement plans you don’t have to set up asset protection as this cannot be used to pay a debt or claim under the Employee Retirement Income Security Act of 1974 (ERISA) and the United States federal bankruptcy law.

What is the best asset protection?

There are several asset protection strategies, however, the most common are:

  • Family Limited Partnerships (FLP)

This happens when you have assets jointly owned by family members under a business name. Because the assets are not in your name and are owned by several individuals, they cannot be seized even if you lose a lawsuit.

  • Asset Protection Trust (APT)

This is one of the best ways you can protect your assets from judgments made against your estate, creditors, lawsuits, etc. It involves creating a trust to hold your assets. When you create a trust, the assets you own will no longer be in your name and will be under the authority of a trustee.

An APT can be domestic or foreign. Currently, only 17 US States including Alaska, Ohio, Rhode Island, Virginia, and Utah can allow you to set up a domestic asset protection trust. As the name suggests, a foreign asset protection trust is established outside of the US jurisdictions like the British Virgin Islands and the Cook Islands, which are known offshore tax-havens.

The key difference between a domestic and foreign asset protection trust is a domestic ATP may be at risk of federal bankruptcy laws, court orders, state laws because the assets still reside within the US court’s jurisdiction. A foreign asset protection trust will cost you more to create, but it will provide you with more protection of your assets because offshore tax havens rarely enforce US court orders against assets held in trusts in their jurisdictions.

Learn more about how our San Diego attorneys can help you with setting up a trust as part of your estate plan.

  • Use of a Limited Liability Company (LLC)

This is the easiest asset protection strategy. A limited liability company separates your individual and business assets, therefore protecting your personal assets from seizure should a lawsuit be filed against you for failing to honor a business loan.

  • Transferring your assets

To protect your assets from creditor claims, you could transfer them to a spouse, child, relative, or trusted friend. The person you transfer the asset to should be unlikely to have a lawsuit filed against them.

This strategy is, however, risky because if you disagree with the person you transfer the property to, for example, because of a divorce, you could end up losing the assets you’re trying to protect because they don’t legally belong to you.

Let Gallagher Krich Help You Protect Your Assets

If you know or think you’re likely to be sued, call Gallagher Krich, APC, now to let our attorneys help you establish an asset protection plan. Our attorneys have years of experience in asset protection, so we can work with you to secure your real property, savings, investments, wealth accumulated over a lifetime, and even your future income.

When you get in touch, we will assess your financial situation, assets, and risks to come up with the best asset protection plan for you. Working with an attorney from Gallagher Krich, APC, the asset protection plan we set up will make it impossible for creditors, former spouses, or court judgments to take your assets.

Call us at (858) 926-5797 or contact us online today to schedule a free consultation with an experienced asset protection attorney.

Latest News & Updates

Meet Our San Diego Attorneys

Thomas F. Gallagher, Esq.


(858) 926-5797
tom [at] tomgallagherlaw.com

Troy B. Krich, Esq.


(858) 926-5797
troy [at] tomgallagherlaw.com

Contact Gallagher Krich, APC

What Clients Say:

Mike K., Google

Rated 5.0 out of 5
August 11, 2023

Thank you so much for all your help in resolving a real estate matter so quickly and efficiently.

Mike K

What Clients Say:

Jonas Y., Google

Rated 5.0 out of 5
December 28, 2022

If you need a “ Closer”, go see Troy. Troy has been one of the best attorneys I have ever worked with. I don’t typically give reviews but after the last case Troy helped me settle out of court, I won’t hesitate to use Troy again! Thanks for all you do Troy !

Jonas Y

What Clients Say:

Daniel E., Google

Rated 5.0 out of 5
October 11, 2022

I left a voicemail for Tom late Sunday evening and received a phone call first thing the next morning.

Tom was very quick to reply to any questions I had, and if he was caught up in a meeting, he was sure to return my call promptly.

Tom provided sound and logical advice, during a very stressful and uncertain time. At times I asked him to be more aggressive and was often met with the pros and cons of that decision, allowing me to understand the approach and thought process behind his strategy.

Ultimately he provided options for several paths for us to take, worked swiftly, and got us where we needed to be.

He reached out several times to check on my sanity and make sure I was good.

As someone with very high expectations, I would highly recommend his services. He provided expertise that proved to be successful, and also took the time to make sure I was emotionally solid.

Tom assisted with me with a 50% / 50% ownership conflict.

Daniel E

What Clients Say:

Deanna, LawConnect.com

Rated 5.0 out of 5
February 23, 2022

Really informative and actionable, very grateful to have connected and I look forward to working more with them in the future.


What Clients Say:

Marilyn, LawConnect.com

Rated 5.0 out of 5
February 8, 2022

i liked that a lawyer, and not a staff member, called me to get the details and he gave me his opinion of what his initial thoughts are about my case.


What Clients Say:

Bob W., Google

Rated 5.0 out of 5
August 30, 2021

What was thought to be a simple breach of contract turned into a nightmare. Through their tenacity and their deep knowledge of the law, we were successful. There is no reason to look any further as you will not get any better representation than this firm. I highly recommend them and strongly suggest that if you are considering starting a business or are already managing one, this firm will guide you, avoiding the troubled waters businesses sometimes find themselves in.

Bob W

What Clients Say:

Rasmita M., Google

Rated 5.0 out of 5
August 13, 2021

Johnny Nitti helped us with our estate plan. He was very meticulous while drafting the plan and spent enough time to explain the details to us. He filed the deed with county recorder and paid for the fees himself. Overall, Johnny did a great job and we definitely plan to work with him in the future for any updates to our EP.

Rasmita M

What Clients Say:

George A., Google

Rated 5.0 out of 5
August 7, 2021

Johnny Nitti helped me with my estate planning (will, living trust, etc.) and made the process smooth. He is very responsive and organized. I highly recommend contacting Johnny.

George A

What Clients Say:

Ashley C., Google

Rated 5.0 out of 5
July 18, 2020

Tom Gallagher is very knowledgeable and helpful when it comes to business law. I reached out to him reguarding the Pandemic and my salon and I’m so glad I did. Many times stress and hard times can fog clarity and he really helped me understand the laws.

Thanks Tom!!!

Ashley C

What Clients Say:

Evan D., Google

Rated 5.0 out of 5
July 16, 2019

Thank you Troy for everything! Professional, prompt, and smooth handling of my case. I will be recommending to anyone that is in need of a lawyer.

Evan D