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Have you ever been on the wrong side of a lawsuit? If so, you know how grueling it can be, and I hope you came out on the "right" side!  If you are a physician, and you are wrongfully sued for malpractice—well, even with liability insurance premiums that are staggering, it may not even cover most of the exposure. The same goes for business owners who may be dragged into court and incur expensive litigation costs. If you lose, you will have a judgment against you, which will put business assets and possibly personal assets at risk.

Maybe some people are just "lawsuit happy" these days. Alarmingly, if you are simply an affluent individual trying to live a comfortable lifestyle and minding your own business, you may become the target of a frivolous lawsuit if financial desperation leads a person to take a legal shot at you for any reason. If that happens, and the court sides with the plaintiff, you could lose business interests, investments, or other property. So what can you do to protect your assets in these types of scenarios?

You can do plenty.

And, it's good to know that you can, in fact, take action before there is a problem. In some states, the simple act of purchasing life insurance and annuities can help to protect your assets. But whatever strategy you follow, you need to act before any problems arise. 

So please consider these 3 possible asset-protection strategies and vehicles now.

  1. Transferring property. One simple way to protect assets is to give them away. You can transfer as much property as you like to your spouse (if a U.S. citizen) free of estate or gift tax, and under the annual gift tax exclusion, you can also make gifts of up to $13,000 a year to anyone else. Additionally, you're entitled to a lifetime, cumulative gift tax exemption of $5 million. But, some transfers may create estate tax complications, so a CPA or financial advisor should be consulted.
  2. Forming a corporation. If your fortune is tied to business interests, a traditional method for avoiding personal liability is to establish a C corporation. In the absence of fraud, you normally won't be liable for corporate debts, but you also aren't necessarily protected against professional liability if you are a professional. The personal liability protection of a C corporation is not impregnable, however, as the courts have increasingly allowed persistent plaintiffs to "pierce the corporate veil" and reach a defendant's personal assets. Other corporate variations, such as S corporations and LLCs offer similar protections.
  3. Owning assets jointly. Another long-standing asset protection strategy is to title property as joint tenants with your spouse or another family member. A special type of co-ownership only between a husband and wife, known as "tenancy by the entirety" (TBE), may protect assets from creditors. More than half the states now recognize TBE protections.  

There are other strategies as well including self-settled trusts, foreign trusts, and domestic trusts. Devising an effective asset-protection plan is often complex and subject to crucial missteps.  You can call me at 732-974-3770 and I'll be happy to tell you more about them, or email me at or visit us at

See you next time!


Securities offered through American Portfolios Financial Services, Inc. Member: FINRA, SIPC. Investment Advisory services are offered through American Portfolios Advisors, Inc., an SEC Registered Investment Advisor. Froehlich Financial Group, LTD is not an affiliate of APA or APFS.   



Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

Securities offered through American Portfolios Financial Services, Inc. Member: FINRASIPC. Investment Advisory products/services are offered through American Portfolios Advisors, Inc., a SEC Registered Investment Advisor. Froehlich Financial Group, Ltd. and American Executive Benefits, Inc. are not affiliates of APA or APFS. Executive wealth management products/services are offered through Froehlich Financial Group, LTD. a registered investment advisor

This communication is strictly intended for individuals residing in the state(s) of CA, CO, CT, DE, FL, IL, MA, MD, MI, NC, NJ, NY, OK, PA, RI, SC, TX and VA. No offers may be made or accepted from any resident outside the specific states referenced.

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