          
          
          
                          The Need for Protection
          
          
               One idiot strapped a refrigerator on his back and
          ran in a race.  The strap broke and he hurt his back. 
          He sued the strap manufacturer and collected $1.3
          million.
          
               It is impossible to buy a skateboard anywhere
          these days.  The manufacturers can't get liability
          insurance.  (So the kids make more dangerous home-built
          ones instead.)
          
               Once there is a judgment against somebody, the
          court swears them in and takes their testimony "in aid
          of collection."  They have to tell the court everything
          -- no matter how unjust the case against them is.  What
          properties they own, what savings accounts, what
          checking accounts, and what money market funds, and how
          much is in each one.  What stocks they own, what bonds
          they own, where each and every safe deposit box is and
          what precisely they have in each.
          
               As a judgment debtor a person has no rights, as
          the winner now owns everything.  If one were a rapist
          or murderer, they'd have more rights, such as a right
          to silence.  And heaven help the defendant if he fudges
          on his testimony.  If he conceals a safe deposit box,
          or that stash of gold coins he buried ten years ago in
          the garden, he's committing perjury, a felony.  With
          mandatory sentencing guidelines in effect in most
          jurisdictions, he will go to prison for the amount of
          time specified in the statute -- the judge no longer
          has the discretion to set the sentence but must
          sentence in accordance with the guidelines created by
          the legislature for that  crime.  The popular belief
          that people receive probation for a first offense is no
          longer the case in many jurisdictions, including the
          federal court system.  The perjury defendant may even
          spend more time in prison than the thug who broke into
          his house and slipped on his child's marbles.  
          
               While the defendant's lying about his assets will
          always be the felony of perjury, if the thug walked
          into the house in daylight through an unlocked door,
          his crime is likely to be the misdemeanor of trespass,
          with a maximum sentence of six months, versus the
          perjury felony with a maximum of from five to twenty
          years, depending upon the jurisdiction.
          
               It is all too easy to go around saying it won't
          happen, but once it happens, it is too late.  If money
          is transferred after an incident or accident, that is
          concealing assets, which can cause both criminal
          charges and civil loss of other assets.  The law looks
          at it as stealing the property of the person who is
          suing, or who may sue.  The defendant may think it is
          his lifetime savings from hard work, but legally he now
          holds it in trust for the person who has a pending
          claim.  Presumed knowledge of the possibility of a
          claim is sufficient to invoke these fraudulent transfer
          laws.  So if somebody moves their money the morning
          after an auto accident, it is likely to come back to
          haunt them.  The only legally valid protection is to
          take careful and legal protective steps before  there
          is even a potential claim against a person or his
          assets.  
          
               While these concerns about protecting assets apply
          mostly to American readers, non-American readers need
          to consider the dangers of keeping bank accounts or
          other assets in America while this craze rages on.  It
          also raises serious concerns about the viability of
          investments in American businesses that might be
          affected by such judgments.
          
          
          Inadequate insurance
          
               A doctor works all his life to provide competent
          and effective care for his patients.  A surgery leaves
          a patient crippled.  No surgeon is 100% successful, but
          the jury in the malpractice suit awards the plaintiff
          $15,000,000, an amount greater than the policy limits. 
          Or worse, the insurance company fails and there is no
          protection for the doctor.
          
          
          Partnerships
          
               A law firm is having its monthly partners meeting. 
          They send out for lunch.  Most want pizza but one wants
          a pastrami sandwich.  Their secretary agrees to go pick
          it up.  Unknown to the twelve partners, this person has
          a horrible driving record.  On the way back, the
          secretary runs into a group of pedestrians.  The police
          arrive.  The secretary eats the pastrami and the
          partners are sued.  A judge decides that they are
          liable as the secretary was performing an act for the
          partners in her ordinary course of employment.  The
          jury, sympathetic to the victims and enraged by the
          driving record, awards $3,000,000 in damages.  As
          partners, all of the lawyers are jointly and severally
          liable.  In effect, the jury has awarded the plaintiffs
          three condos, two sail boats, three houses, nine cars,
          and twelve installment notes.
          
          
          Directorships
          
               It used to be an honor to be a director of a bank,
          savings and loan or prominent business concern.  Today
          there are over 2,243 directors of banks and savings
          institutions being sued.  One hospital failed and the
          IRS sued its community advisory board for unpaid back
          taxes.
          
          
          Simple Ownership
          
               A land speculator bought a parcel for subdivision,
          held it for one week and sold it to a developer. 
          Later, after houses were built, a homeowner who was an
          environmental engineer noticed an old buried drum.  It
          contained a deadly toxin.  The Environmental Protection
          Agency held the site to be a "superfund" site.  The
          largest law firm in the world, Uncle Sam, began an
          action against the landowners.  The suit brought in the
          land speculator.  Although the total invested was only
          $100,000, the inferred liability exceeded $30,000,000. 
          Under the law this can never be discharged.  The
          corporate builder and corporate developer collapsed
          leaving the individual land speculator to carry forever
          his modern scarlet letter.
          
          
          Joint Ownership
          
               Mom, with the best of intentions, deeded her house
          to joint ownership with her son.  She intended to avoid
          probate, taxes, etc.  Unfortunately, a tax shelter that
          he participated in resulted in an unfunded tax
          liability of $75,000.  The son was a little down on his
          luck at the time of the tax levy.  The IRS can seize
          and sell the house according to the United States
          Supreme Court.
          
          
          Inferred Liability
          
               A woman answers a knock at the door and lets the
          IRS agent into her house.  the IRS agent gives her a
          bill for over $100,000 of back taxes, penalties, and
          interest with her ex-husband's name.  Apparently he was
          a little creative with his filings, while she simply
          signed their joint return.
          
          
          Inadequate Corporation

               Almost everyone knows that you may use a
          corporation to shield liability from its shareholders. 
          Unfortunately most people fail to follow all the rules
          about keeping the corporate papers and procedures up to
          standard.  A good attorney has an excellent chance of
          penetrating the "corporate veil" and going directly to
          the officers', directors' and shareholders' pockets.
          
          
          Charitable Adventures
          
               It is a sad but true statement that the prudent
          person today should refrain from serving in any
          responsible capacity for a charitable organization. One
          of the largest items in the national Boy Scouts' annual
          budget are legal expenses.  Two scoutmasters take a
          number of boys camping.  Boys will be boys, and not all
          scoutmasters are always perfect.  The scoutmaster who
          was not at the lake while his partner allowed rough
          play that led to a drowning may be held equally liable
          since he accepted responsibility for all of the
          children.
          
          
          Childhood Dreams
          
               You are so proud of your child.  She has
          progressed well in school and has been responsible in
          all her habits.  For a seventeen year old, she is
          remarkable.  She does, however, like rock music.  While
          returning from the grocery with your salad fixings her
          favorite new song is played on the radio.  She turns up
          the volume on your expensive car stereo.  Way up.  She
          does not hear the siren of the rescue vehicle
          overtaking her to pass.  The ensuing wreck leaves a
          trail of havoc that leads right into court.  Your
          insurance company settles the first case for policy
          limits leaving you high and dry on the other cases. 
          Being responsible for her until emancipated, you are
          left holding the bag for her accident judgments.
          
               How many other examples do you need?  While the
          incidents cited above may seem exceptional, to those
          affected they meant financial ruin.  This book gives
          you the background needed to begin the process of
          lawsuit and asset protection.  It is not designed as a
          tool to help someone avoid paying his ordinary debts. 
          But its techniques can be used as a defense against the
          extraordinary and unintended financial calamities that
          can occur too easily in our litigious world.
          
          
          Getting help in creating an asset protection plan
          
               The best way to do this is to seek the assistance
          of professionals, and there is now an asset protection
          firm that works with clients from all over the country. 
          They can also work with your existing lawyers or
          accountants if you wish.  For a free information
          package write: Asset Protection Corporation, Suite
          201A, 14418 Old Mill Road, Upper Marlboro, Maryland
          20772. 
          
          
          
