MAYER & RISER, PLLC
ATTORNEYS AT LAW
HIGHLANDS, NORTH CAROLINA
(828) 526-3731
Introduction to
Domestic Asset Protection Planning

The purpose of estate planning and asset protection planning is simple - it is to preserve your wealth for yourself and your family and to transfer your wealth to your intended beneficiaries.  Much of what we think of as estate planning involves working within the rules of the Internal Revenue Code.  Much of what is asset protection involves working within the rules of "fraudulent transfer" and bankruptcy.  A "fraudulent transfer" is not one involving the commission of a fraud.  Rather it is a term of law describing, generally, a transfer which has the effect of making the transferor insolvent as to his known and reasonably ascertainable creditors.

As long as there are no creditors on the horizon and as long as you have made no misrepresentations to creditors, the law allows you to protect your wealth by making transfers to protect that do not render you insolvent.  Supreme Court Justice Scalia made this point in a recent case:

[T]here is absolutely nothing new about debtors' trying to avoid paying their debts, or seeking to favor some creditors over others--or even about their seeking to achieve these ends through sophisticated strategies. The law of fraudulent conveyances and bankruptcy was developed to prevent such conduct.¹

So, if a transfer is not a "fraudulent conveyance" and is not set aside by bankruptcy law, it is a valid, lawful and prudent thing to do.  Asset protection planning seems even more prudent in light of (1) new theories of liability that are accepted by U.S. courts every year in areas such as employment practices, malpractice, contract law, and business law; and (2) the extraordinary levels of damage awards for both compensatory and punitive damages.  Liability insurance simply cannot protect against all of the risks to which we are exposed today.  Thus, the need for other ways to manage risk arises.  The primary means for managing risk outside of the context of insurance is by prudently planning the ways in which you hold your assets.

Opportunities for asset protection planning at home in the U.S. exist in all fifty states.  The discussion on this Web site will focus on North Carolina.  You can find out about personal property and wage exemptions, homestead exemptions, protections for jointly held property, protection for retirement plans, protections for life insurance and annuities, protections against wage garnishment, as well as protections provided by corporations, limited liability companies, limited partnerships, and trusts.  Finally, you can learn about "onshore" asset protection trusts in Alaska, Delaware, Nevada and Rhode Island.

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^1. Grupo Mexicano de Desarrollo vs. Alliance Bond Fund, 119 S.Ct. 1961, decided June 17, 1999.