We have assisted hundreds of clients, from medical doctors to business owners to real estate developers, in protecting their assets from the potentially adverse consequences of a lawsuit. We understand that wealth accumulated over a lifetime can be quickly and irrevocably lost in a single lawsuit filed by a creditor or an unhappy customer or client.
At Kramer, Green, Zuckerman, Green, & Buchsbaum, P.A., we know how hard you have worked to build your successful business and amass assets for you and your family. One complaint should not result in losing everything you have achieved in your professional life. Contact us today to learn what we can do to help prevent this situation from happening to you. Call the offices of Kramer Green at (954) 966-2112 or reach out to us online.
Asset Protection Practice Areas
Here are some of the practice areas in which we assist our asset protection clients:
- Use of statutory creditor exemptions
- Choice of entity to minimize taxes and maximize creditor protection
- Formation of management companies to protect accounts receivable and other assets
- Formation of limited partnerships and limited liability companies
- Formation of domestic asset protection trusts
- Fraudulent conveyance issues
- Exemption Planning
The first line of defense is exemption planning. Florida has among the most generous exemption laws in the country. We try to make use of the Florida exemption statute to the extent that it makes economic sense. Most creditors who sue you and get judgments against you, or judgment creditors, cannot reach any of your exempt assets or take them to pay your debts.
Florida law exempts the following assets:
- The cash value of life insurance policies
- Individual retirement accounts
- Pension and profit-sharing plans
- Wages paid to a head of household
- Disability benefits without limit
Florida also exempts the homestead, or the primary residence, without any dollar limitations. The only limitation applies to the size of the lot. The exemption is limited to ½ acre within a municipality and 160 acres outside a municipality.
Handling Non-Exempt Assets
You might wonder how to handle your other assets that are not exempt under state law. For example, you may own:
- Certificates of deposit
- Real estate other than your homestead
These assets are not exempt assets under state law. In this situation, we often put these assets in a family limited liability company or family limited partnership. Other limited liability company owners or limited partners could be the spouse and children, either directly or in trust.
Here is where we discuss the “shoe metaphor.” In general, the judgment creditor “steps into the shoes” of the judgment debtor, or the person who owes the creditor money and can seize their bank accounts, stocks, bonds, and other assets.
However, there are two exceptions to the shoe metaphor: an interest in a limited partnership and an interest in a limited liability company. In these cases, the judgment creditor’s rights are limited to a “charging order.” Essentially, the creditor only has the right to intercept distributions from the entity, if any, that the judgment debtor would otherwise receive. We can often draft the entity agreements in such a way as to prevent distributions unless all partners or members consent. Without such consent, there can be no distribution and no payment to the judgment creditor.
Another vital aspect of asset protection planning is organizational planning. The biggest concern with organization planning is “inside liability” and “outside liability.”
Inside liability refers to entity liability. Under agency theory, the employer is liable for the acts of his employees in the course and scope of their employment. Under this theory, if the employee is liable, the entity is liable. For instance, if a doctor commits malpractice, the doctor’s employer also is liable. The choice of entity is unimportant; liability is liability.
What is more important is what assets the entity owns. If the entity owns no assets, there are no assets from which to pay the judgment. We have legal techniques to avoid liability in this manner.
On the other hand, outside liability refers to the individual’s ownership interest in an entity. In a lawsuit unrelated to the entity, the individual can lose that ownership interest to the creditor. Any organizational planning needs to consider this factor, as well.
We also need to consider who controls your assets. Many professionals, businesspersons, and others are understandably reluctant to give up control to others for asset protection. However, there are ways to handle this issue to your satisfaction, as well.
Asset Preservation and Taxes
We do not perform asset protection or wealth preservation techniques in a vacuum. We need to be careful not to protect assets from theoretical creditors, only to create tax problems. Therefore, we need to consider income taxes, estate taxes, gift taxes, and employment taxes in creating an asset protection plan.
Call Kramer Green and Protect Your Assets to the Greatest Extent Possible
The biggest issue we face is ensuring that our clients complete their asset protection and planning in advance. It is a much easier process to help them consummate their planning before an adverse event, such as malpractice, occurs. However, after an adverse event occurs, the opportunities available to protect your assets are far more limited. In such a case, the laws of fraudulent conveyances and asset conversions can unwind your asset protection plans and cause you catastrophic losses.
Contact our offices today by calling (954) 966-2112 or filling out our contact form online. Schedule a time to meet with our Hollywood asset protection lawyers and talk to us about your overall asset protection needs. Together, we can develop a strategy that is best designed to protect your assets should a lawsuit occur in the future.