During our lifetime, depending on our resources and status, we acquire or accumulate assets through purchase, succession and other forms of transfer. Protecting our assets is probably equally important as acquiring them. However, lack of knowledge, complacency, and misguided actions can put us at risk.
We need to constantly remind ourselves that we are living in an age where lawsuit has become a normal trend in settling disputes, even if the case may be a petty one. Let’s not wait for a plaintiff to sue us, whether they has a legitimate claim or not against respondent asset owner, protecting our assets should be done the earliest time possible.
Prudent owners, especially those engaged in a business, should seek help or advice from experts regarding Asset Protection. These professionals, mostly lawyers and accountants, can help us prevent or minimize the loss of our properties. They can help us plan, can provide helpful solutions and strategies on protecting our assets in anticipation of an unexpected dissipation or waste of our property.
The objective of the Law on Asset Protection is simply to shield our assets from any seizure and forfeiture actions in the future, resulting from cases filed against us. Below are some of the most common instances that our assets can be taken from us:
- Non-payment of income tax or capital gains tax due. An individual or a business’ non-payment of income tax or capital gains tax despite notice or summon may cause assets to be a subject of garnishment or forfeiture. We can be held liable simply because of non-payment of the said taxes, and it may be irreversible or too late to stop the federal government from enforcing it.
- Failure to pay debts. Our failure to pay our debts in spite of receiving requests from our creditor may put our assets at risk following the receipt of an adverse judgment.
- Bankruptcy. If a company is declared bankrupt by the court, meaning that it no longer has the capacity to pay all its debts, its remaining assets, real or personal, may be taken to pay its creditors.
- Fraudulent transactions and other cases. Respondent’s assets may be seized due to a plaintiff’s claim to an injury action.
- Divorce. Separation or divorce may also expose our assets to risk.
When we speak of assets that need protection, we refer to several types, namely:
- Fixed assets – these are assets ordinarily used and intended for business activities and are long-term in nature such as an equipment.
- Capital assets – technically, capital assets are only intended for private enjoyment or investments (house, car, stocks and bonds) and not for commercial purposes.
- Current, liquid, or quick assets – are personal property readily convertible to cash like shares of stocks and bonds.
- Frozen assets – are the opposite of current, liquid and quick assets because these are real properties, such as a house, which are not readily convertible to cash.
Also, these are assets that cannot be touched or disposed due to some legal limitations like a spendthrift trust where the beneficiary has no control over the spending of a trustor’s money as only the trustee has full discretion on how to spend the money.
- Accrued assets – these are unrealized revenues or income because the owner of the goods have yet to be paid by the customer.
Professional experts on Asset Protection can better help us understand and interpret the law. They can teach us how to prevent and lower our risks, how to manage and deal with it, help us structure our business, and guide us in legally acquiring and safeguarding our assets.
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