I was just reading about a new California case that cut into the asset protection world a little bit. It’s the case of Kilker v. Stillman, 2012 WL 5902348 (Cal.App. 4 Dist., Unpublished, Nov. 26, 2012).
Asset protection, in most cases, is simply estate or asset planning that happens to include some protection elements to it. For example, creating an irrevocable trust has some creditor protection elements to it but the purpose is NOT asset protection. Rather the purpose is tax planning generally.
If one sets up a trust for the purpose of avoiding creditors the Courts do not like that. In fact, it can be construed to be a fraudulent conveyance and the whole transaction undone.
The Kilker case involved a person that created a Nevada trust for asset protection and told everybody that was why he set it up. In fact, even on the witness stand, when being sued, that’s what he said.
Mr. Stillman also, it sounds, set up the trust himself rather than with the aid of an attorney. I don’t think I need to finish that thought for you.
So, set up irrevocable trusts, LLCs and other estate planning devices that have creditor and asset protection elements to them… but do NOT go around telling everybody that’s what you did!
If you want to talk about advanced ESTATE PLANNING let’s talk! -John