A Story of Protection and Peace of Mind:
Imagine David and Emily, a successful couple living the American dream. David is a dentist with a thriving practice, while Emily runs a growing real estate portfolio. They’ve worked hard to build their wealth but constantly worry about what would happen if they faced a devastating lawsuit. One night, as they watched the news report another multi-million-dollar verdict in a malpractice case, David turned to Emily and said, “That could happen to us.”
This isn’t just paranoia. Litigation in the U.S. has reached unprecedented levels, with many high-net-worth professionals and business owners living in fear of lawsuits that could strip them of everything they’ve built. The only way forward is to be proactive—and that’s where asset protection planning comes in.
1. Why Litigation is on the Rise
In today’s legal climate, success often makes you a target. Renowned lawyer and author Philip K. Howard describes the pervasive “fear of liability” as a defining characteristic of our modern society.
David and Emily’s concerns are valid:
• Out-of-Control Lawsuits: The number of frivolous legal actions continues to rise.
• Emotion-Driven Juries: Verdicts are often based on sympathy rather than facts.
• Result-Oriented Judges: Judicial bias can influence case outcomes.
• Skyrocketing Verdicts: Judgments in malpractice cases frequently exceed insurance coverage, leaving professionals financially exposed.
For healthcare professionals like David and business owners like Emily, it’s clear they need to fortify their assets against predatory litigation.
2. The Evolution of Asset Protection Planning
Recognizing the growing litigation threat, a few innovative attorneys began developing asset protection strategies nearly three decades ago. Their goal was to provide clients with legal mechanisms to shield their assets from baseless lawsuits.
A recent Wall Street Journal survey highlighted how this once niche legal field has become mainstream:
• 35% of individuals with over $1 million in assets have implemented asset protection plans.
• This is double the percentage from just three years ago.
• Among those without plans, 61% expressed a strong interest in setting up one.
David and Emily realized they needed more than basic insurance—they needed a legal fortress around their assets.
3. Building a Fortress: Asset Protection Structures That Work
At Bradley Legal Corp, we customize plans to meet our clients’ unique needs. For David and Emily, the best approach involved two essential legal tools:
Asset Management Limited Partnership (AMLP)
The first line of defense in asset protection is the Asset Management Limited Partnership (AMLP), often referred to as a Family Limited Partnership (FLP). This structure creates a clear boundary between you and your wealth, making it harder for creditors to seize assets.
Key Features of an AMLP:
• General Partner: Maintains management control but has liability.
• Limited Partner: Owns a share of the partnership but has no management control or liability.
How It Works for David:
By holding their practice and and LLCs holding their real estate investments in an AMLP, David and Emily legally separate their personal assets from their professional liabilities. Even if David faced a malpractice suit, creditors would only be able to pursue a charging order—which doesn’t grant them access to the partnership’s assets.
“So, even if I get sued, they can’t touch our investments?” David asked.
“Exactly,” their attorney replied.
The Bridge Trust®: The Final Line of Defense
If litigation escalates, a third layer of protection activates: the Bridge Trust®. This sophisticated tool combines the best aspects of an offshore trust and a domestic trust.
What Makes the Bridge Trust® Unique:
1. Offshore Strength: Registered in an offshore jurisdiction, providing immunity from U.S. court orders.
2. Domestic Simplicity: Operates like a domestic trust for tax purposes, avoiding complicated IRS reporting.
3. Flexibility: When a lawsuit becomes a real threat, the Bridge Trust® can “break the bridge” and fully convert to offshore status, placing assets beyond U.S. jurisdiction.
“So, we get the strength of an offshore trust without the headaches?” Emily asked.
“Exactly,” their attorney confirmed.
4. Benefits of Asset Protection Planning
David and Emily implemented their plan and immediately felt more secure. Here’s why:
Key Advantages of a Customized Asset Protection Plan:
• Lawsuit Deterrence: When plaintiffs discover that assets are held in a Bridge Trust®, many abandon their claims.
• Legal Ownership Separation: By separating ownership from control, their assets became less attractive to creditors.
• Negotiation Leverage: With their wealth protected, David and Emily could negotiate legal disputes from a position of strength.
• Beneficiary Support: Even during litigation, the Bridge Trust® ensured that David and Emily retained access to their assets.
• Flexibility: After legal threats subsided, they could choose to bring their assets back to the U.S. or keep them offshore.
5. Common Pitfalls and How to Avoid Them
David and Emily’s attorney emphasized the importance of proper implementation to avoid legal issues:
Critical Considerations for Asset Protection:
• Timing: The plan must be funded before any lawsuits are filed; otherwise, it could be seen as a fraudulent transfer.
• Solvency: After transferring assets, David and Emily needed to remain financially solvent to pay their foreseeable debts.
• Expert Guidance: Asset protection is a specialized field—working with an experienced attorney is crucial to avoid mistakes.
Avoiding Fraudulent Schemes
David and Emily learned that legitimate asset protection is tax-neutral and doesn’t involve hiding assets or evading taxes. Their attorney warned them to be wary of schemes that promise both tax savings and asset protection—the government classifies such tactics as fraud and tax evasion.
6. Why Asset Protection Planning is Essential for Peace of Mind
Once their plan was in place, David and Emily felt an enormous sense of relief. David could focus on his patients, and Emily could grow their real estate portfolio, knowing their assets were secure.
“Now we can sleep at night,” Emily said.
Taking control of your financial future isn’t just about protecting what you have—it’s about ensuring you can keep building your legacy without fear.
Key Takeaways:
• AMLPs and Bridge Trusts® work together to create a robust defense against litigation.
• Properly implemented asset protection plans deter frivolous lawsuits and provide leverage in negotiations.
• Expert guidance is essential to ensure compliance with U.S. laws and avoid fraudulent schemes.
Conclusion: Protect Your Legacy Before It’s Too Late
David and Emily’s story is a reminder that litigation can happen to anyone, but it doesn’t have to destroy your financial future. By investing in a comprehensive asset protection plan, you can build a legal fortress around your wealth and enjoy peace of mind.We can help you.
Call our Asset Protection Law firm to schedule a consultation with an Asset Protection Attorney at (888) 773-9399.
By: Brian T. Bradley, Esq.
