By the time people reach their forties, they have usually amassed a few valuable assets like a house. With your growing financial portfolio and assets, it is important that you take steps to protect them. In this depressed economy, every asset you have and every dollar you earn is at risk. Creditors and litigators have become like vultures circling any successful person with unprotected assets. The only way to protect your hard-earned valuables is by setting up an appropriate asset protection plan. The most important thing you need to keep in mind is that you have to start planning in advance. Only a few things you do after a liability or claim arises can diffuse the situation. In fact, most things you do afterwards could be considered a ‘fraudulent conveyance’, and a court can make you unwind the transaction and give your assets to the creditors. As a general rule, there is nothing you can do once a creditor situation arises. Therefore, you need to take steps beforehand in order to ensure that creditors don’t have access to your assets. To protect your assets, you can remove your name from their ownership, but still retain control on them. You want to look poor but be rich. You can do this by transferring your assets into a limited liability company or LLC. A creditor cannot touch the LLC unless you make some distributions from it. They can’t touch any of the assets in the LLC or any assets purchased or sold through it. Another entity that can protect your assets is an irrevocable trust. Since you don’t technically own any of the assets you transfer into an irrevocable trust, your creditors won’t be able to attach any debt you owe. You can name a child, spouse or friend as the trustee and retain actual control over your assets while losing all legal ownership or control. Remember that trusts are meant for personal assets, while business assets go into LLCs. LLCs aren’t meant as your personal piggybanks, so don’t use them as such. If you place your personal assets in an LLC, the creditor can pierce the entity on the basis of some theory. You should only place your personal assets in a trust. There is a long and solid law that protects trust assets as long as your trust is properly drafted and funded. In any type of creditor situation, there are some exemptions granted to you by law. That means the law allows you to keep the assets under these exemptions no matter how much money you owe to your creditors. It is often a good idea to convert some of your ‘not exempt’ assets into assets that are exempt. The most common creditor-exempt entities are life insurance policies, pension plans, IRAs and annuities. When establishing an asset protection plan, always consult a professional. The specific steps you need to take will differ according to your specific situation. An asset protection attorney is a trained specialist who can put into place a plan that can protect your assets without being deemed fraudulent.