A person who appears to own nothing is the most unattractive target to lawsuit hounds. If the debtor owns a home, the question is: Can anyone seize it? In some American states, a primary residence can not be sold to satisfy an outstanding obligation other than that of the mortgage.
As an added safeguard, the real estate may even be homesteaded or placed in another entity’s name. What about the motor vehicle? In several American states, a motor vehicle cannot be the subject of attachment if it is principally used for work. Other states require the presence of a minimum amount of equity in the car before it could be attached.
Is there something you can do to protect your properties without breaching the law? “An asset protection plan is not an excuse to defraud creditors,” wrote William Prescott. Asset protection planning requires the mind-set of an ersatz defense counsel. It is important that you build your protective device without any fraudulent intent. No matter how impregnable a wall is built, someone will devise a way to penetrate it, demolish it, and haul everything away. The truth is that your properties can be taken away from you through swindling, robbery, extortion, theft, usurpation, embezzlement, eminent domain, and through other means. You may also lose your properties through foreclosure, acquisitive prescription, sale of the property to an innocent third person, and conversion.